Question

In: Finance

Joel Foster is the portfolio manager of the SF Fund, a $3 million hedge fund that...

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?

*****Please show work on EXCEL spreadsheet, please show EXCEL formulas****please do not answer unless you use excel

STOCK AMOUNT BETA
A $1,075,000 1.20
B 675,000 0.50
C 750,000 1.40
D 500,000 0.75
$3,000,000

Solutions

Expert Solution

Answer - An investor should expect ( and require) 11.105% return

Reason -

You can see the formulas in function box as I have applied them, and other places where, simple multiplication has been done I have specified it at the top of the column. Moreover CAPM formula I have given in detail.

jeff jeffy answered 10 months ago
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