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Assume that you are the portfolio manager of the SF Fund, a $4 million hedge fund that contains the following stocks. The required rate of

Assume that you are the portfolio manager of the SF Fund, a $4 million hedge fund that contains the following stocks. The required rate of return on the market is 9.50% and the risk-free rate is 2.50%. What rate of return should investors expect (and require) on this fund? Do not round your intermediate calculations.

Stock Amount Beta
A $1,400,000 1.20
B $860,000 0.50
C $1,140,000 1.40
D $600,000 0.75
$4,000,000
a. 12.37%
b. 9.77%
c. 7.27%
d. 9.24%
e. 7.00%

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