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%

---

Definitions:

Overcompensation

A psychological term referring to the process of making up for perceived deficiencies and weaknesses by emphasizing strengths or developing new abilities.

Alfred Adler

An Austrian medical doctor and psychotherapist who founded the school of individual psychology, emphasizing the importance of feelings of inferiority and social interest.

Sports Car

A vehicle designed for high speed and performance, with great emphasis on handling, agility, and aesthetic appeal.

Reinforcement and Punishment

Techniques used in behavioral psychology to increase or decrease a specific behavior through rewards or penalties.