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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 1.90%. What rate of return should investors expect (and require) on this fund? Do not round your intermediate calculations.
Stock | Amount | Beta | ||
A | $1,260,000 | 1.20 | ||
B | $860,000 | 0.50 | ||
C | $920,000 | 1.40 | ||
D | $960,000 | 0.75 | ||
$4,000,000 |
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