Joel Foster Is the Portfolio Manager of the SF Fund,a

question 64

Multiple Choice

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? $$\begin{array}{l}\begin{array} { c c c } \underline{\text { Stock } }&\underline{ \text { Amount } }&\underline{ \text { Beta} } \\\text { A } & \$ 1,075,000 & 1.20 \\\text { B } & 675,000 & 0.50 \\\text { C } & 750,000 & 1.40 \\\text { D } & 500,000 & 0.75\end{array}\\\quad \quad \quad \quad \quad \underline{\$ 3,000,000}\end{array}$$

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