1.

Assume that you are the portfolio manager of the SF Fund, a $3 million hedge fund that contains the following stocks. The required rate of return on the market is 11.00% and the risk-free rate is 2.00%. What rate of return in percentage should investors expect (and require) on this fund?

Do not round your intermediate calculations. Answer just the number without the % sign. Round to two decimal places.

Stock		Amount		Beta
A		$1,075,000		1.20
B		$675,000		0.50
C		$750,000		1.40
D		$500,000		0.75
		$3,000,000

2.

Suppose you hold a portfolio consisting of a $10,000 investment in each of 8 different common stocks. The portfolio's beta is 1.25. Now suppose you decided to sell one of your stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.55. What would the portfolio's new beta be?

Do not round your intermediate calculations. Round the final answer to 2 decimal places.

3.

Taggart Inc.'s stock has a 50% chance of producing a 36% return, a 30% chance of producing a 10% return, and a 20% chance of producing a -28% return. What is the firm's expected rate of return in percentage?

Do not round your intermediate calculations. Answer just the number without the % sign. Round to two decimal places.

4.

Jim Angel holds a $200,000 portfolio consisting of the following stocks:

Stock		Investment		Beta
A		$50,000		1.20
B		$50,000		0.80
C		$50,000		1.00
D		$50,000		1.20
Total		$200,000

What is the portfolio's beta? Round the final answer to 2 decimal places.

Do not round your intermediate calculations.