Assume That You Are the Portfolio Manager of the SF

question 121

Multiple Choice

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 11.00% and the risk-free rate is 5.00%.What rate of return should investors expect (and require) on this fund?

• A)10.56%
• B)10.83%
• C)11.11%
• D)11.38%
• E)11.67%

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Definitions:

Null Hypothesis

A default hypothesis that there is no significant difference or effect, used as a starting point for statistical testing.

Type I Error

A Type I error occurs when a true null hypothesis is incorrectly rejected.

Rejecting

The act of not accepting or dismissing a statistical hypothesis based on the analysis of data.

Level of Significance

The threshold probability used in hypothesis testing to determine whether to reject the null hypothesis.