A newly developed fund has total capital of $300 million invested in three stocks: Stock Investment Stocks Beta A $150 million 1.0 B 80 million 0.8 C 70 million 0.5 The current risk-free rate is 4 percent, whereas market returns have the following estimated probability distribution for the next period: Probability Market Return 0.1 10% 0.2 12% 0.4 13% 0.2 16% 0.1 22%

1. Compute the funds required rate of return for the next period