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 12.00% and the risk-free rate is 1.50%. What rate of return should investors expect (and require) on this fund? Do not round your intermediate calculations.

Stock		Amount		Beta
A		$945,000		1.20
B		$750,000		0.50
C		$585,000		1.40
D		$720,000		0.75
		$3,000,000

-A mutual fund manager has a $32.00 million portfolio with a beta of 1.05. The risk-free rate is 4.25%, and the market risk premium is 7.00%. The manager expects to receive an additional $16.00 million which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? Do not round your intermediate calculations.

-Stock A has a beta of 0.8, Stock B has a beta of 1.0, and Stock C has a beta of 1.2. Portfolio P has 1/3 of its value invested in each stock. Each stock has a standard deviation of 25%, and their returns are independent of one another, i.e., the correlation coefficients between each pair of stocks is zero. Assuming the market is in equilibrium, which of the following statements is CORRECT?

a. Portfolio P's expected return is equal to the expected return on Stock B.

b. Portfolio P's expected return is greater than the expected return on Stock C.

c. Portfolio P's expected return is less than the expected return on Stock B.

d. Portfolio P's expected return is equal to the expected return on Stock A.

e. Portfolio P's expected return is greater than the expected return on Stock B.