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Joel Foster is the portfolio manager of the SF Fund, a $3 million hedge fund that contains the following stocks. The required rate of return
Joel Foster is 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 11.00% and the risk-free rate is 5.00%. What rate of return should investors expect (and require) on this fund?
Stock | Amount | Beta |
A | $1,075,000 | 1.50 |
B | 675,000 | 0.30 |
C | 750,000 | 0.80 |
D | 1,500,000 | 1.40 |
$4,000,000 | ||
10.56% | ||
10.83% | ||
11.11% | ||
11.48% | ||
11.77% |
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