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Assume that you are the portfolio manager of the Coastal Fund, a $3 million hedge fund that contains the following stocks. The required rate of return on the market is 10.00% and the risk-free rate is 4.00%. What rate of return should investors expect (and require) on this fund?

Amount Beta

Stock A $1,075,000 1.20

Stock B 675,000 0.50

Stock C 750,000 1.40

Stock D 500,000 0.75

$3,000,000

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Category:- Basic Finance
Reference No.:- M950615

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