A mutual fund manager expects her portfolio to earn a rate of return of 10% this year. The beta of her portfolio is .7. Assume rate of return available on risk-free assets is 4% and you expect the rate of return on the market portfolio to be 14%.

a.	Calculate the expected rate of return that investors will demand of the portfolio.

Expected rate of return

%

b.	Should you invest in this mutual fund?
	No Yes