Consider the Following Information and Then Calculate the Required Rate

question 62

Multiple Choice

Consider the following information and then calculate the required rate of return for the Universal Investment Fund,which holds 4 stocks.The market's required rate of return is 13.25%,the risk-free rate is 7.00%,and the Fund's assets are as follows: $$\begin{array} { c c r } \text { Stock } & \text { Investment } & \text { Beta } \\\text { A } & \$ 200,000 & 1.50 \\\text { B } & \$ 300,000 & - 0.50 \\\text { C } & \$ 500,000 & 1.25 \\\text { D } & \$ 1,000,000 & 0.75\end{array}$$

• A)9.58%
• B)10.09%
• C)10.62%
• D)11.18%
• E)11.77%

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Definitions:

Mutual Trust

A fundamental element in employment relationships, emphasizing the expectation for parties to act honestly and considerately towards each other.

Contractual Relationship

A legal bond formed between parties through a contract, entailing mutual rights and obligations.

Partnership Registration

The process of legally declaring a partnership to ensure it's recognized by law and able to conduct business.

Limited Liability

A legal structure where a person's financial responsibility is bounded to the amount invested in a business, protecting personal assets from company debts.