Joel Foster Is the Portfolio Manager of the SF Fund

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

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