Rocky Mountain Fund, a $2 million hedge fund, contains the following stocks (see table below). The required rate of return on the market is 14.00% and the risk-free rate is 6.00%. What rate of return should investors expect (and require) on this fund? Amount Beta Stock A $1,075,000 1.20 Stock B 625,000 0.50 Stock C 300,000 0.75 $2,000,000

Answers

13.31% 14.49% 13.79% 14.16%