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

question 238

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

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

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Definitions:

Mnemonic Devices

Techniques a person can use to help them improve their ability to remember something.

Priming

A technique in psychology used to train an individual's memory in both perceptual and conceptual forms.

Serial Position Effect

A cognitive phenomenon where items at the beginning and end of a list are more likely to be remembered than those in the middle.

Effortful Processing

The active process of trying to remember, learn, or understand something, which requires attention and deliberate effort.