Question

Suppose you are the money manager of a $4.98 million investment fund. The fund consists of...

Suppose you are the money manager of a $4.98 million investment fund. The fund consists of four stocks with the following investments and betas:

stock investment beta
a $540,000 1.50
b 700,000

(0.50)
c 1,040,000 1.25
d 2,700,000 0.75

If the market's required rate of return is 11% and the risk-free rate is 6%, what is the fund's required rate of return? Do not round intermediate calculations. Round your answer to two decimal places.

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Answer: 9.80%

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