Joel Foster Is the Portfolio Manager of the SF Fund

question 136

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?
$\begin{array}{lrl}\text { Stack }&\text { Amount}&\text { Beta}\\ \mathrm{A} & \$ 1,075,000 & 1.20 \\\mathrm{~B} & 675,000 & 0.50 \\\mathrm{C} & 750,000 & 1.40 \\\mathrm{D} & 500.000 & 0.75\\&\$3,000,000&\end{array}$

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

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