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Suppose you are a money manager of a $10 million investment fund. The fund is invested in four funds with the following investments and betas:
Suppose you are a money manager of a $10 million investment fund. The fund is invested in four funds with the following investments and betas:
Stock Investment Beta
A $2,000,000 2.00
B 3,000,000 0.80
C 3,000,000 1.10
D 1,000,000 .60
The remainder funds are invested in T-bills. If the market expected rate of return is 7.0% and the risk free rate (T-bill return) is 2.0%, what is the funds expected rate of return?
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