Assume that you are 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 2.00%. What rate of return should investors expect (and require) on this fund?Stock Amount Beta
A 1075000 1.2
B 675000 0.5
C 750000 1.4
D 500000 0.75


Answer 1





3052500 / 3000000  


Required Return = Risk free Return + (Market Return - Risk free return)* Beta

Required Return = 5% + (10% - 5%)*1.0175  

Required Return = 10.08%  

Related Questions

g On January 1 the company had office supplies costing $2,700 recorded as an asset. During the year $9,600 of office supplies were purchased and recorded as an asset, but the company did not make any journal entries to record the use of supplies during the year. The physical count on December 31 revealed that supplies of $3,100 were remaining. What adjusting entry would be necessary on December 31
The Orange Lily Law Firm prepays for advertising in the local newspaper. On January 1, Orange Lily paid $3,600 for six months of advertising. How much advertising expense should Orange Lily Law Firm record for the two months ending February 28 under the a. cash basis? b. accrual basis?
Parrish Plumbing provides plumbing services to residential customers from Monday through Friday. Ken Parrish, the owner, believes that it is important for his imployees to have Saturday and Sunday off to spend with their families. However, he also recognizes that this policy has implications for profitability, and he is considering staying open on Saturday. Ken estimates that if his company stays open on Saturday, it can generate $2500 of daily revenue each day for 52 days per year. The incremental daily costs will be $700 for labor, $500 for parts, $100 for transportation, and $200 for office staff. These costs do not include a share of monthly rent or a share of depreciation related office equipment. Ken is determined not to have employees work on Sunday, but he would like to know the opportunity cost of not working on Saturday. Provide Ken with an estimate of the opportunity cost, and explain why you do not have to consider rent or depreciation of office equipment in your estimate.
Pro Formas can be structured in many different formats; however, they all help forecast a company’s financial feasibility, breakeven, and profitability. How do you envision this knowledge and skill with pro formas will give you an advantage over other job candidates?
LOL Music Store uses the perpetual inventory system to account for its merchandise. On November 17, it purchased $1,000 of merchandise with terms of 2/5,n/60. If payment is made on November 21. Demonstrate the required journal entry to record the payment.

The following data were taken from the records of Clarkson Company for the fiscal year ended June 30, 2017.Raw Materials Inventory 7/1/16 $51,100Factory Insurance $4,700Raw Materials Inventory 6/30/17 46,000Factory Machinery Depreciation 19,000Finished Goods Inventory 7/1/16 98,200Factory Utilities 29,100Finished Goods Inventory 6/30/17 26,100Office Utilities Expense 9,350Work in Process Inventory 7/1/16 26,800Sales Revenue 564,000Work in Process Inventory 6/30/17 22,300Sales Discounts 4,700Direct Labor 147,750Plant Manager’s Salary 65,600Indirect Labor 26,560Factory Property Taxes 9,810Accounts Receivable 27,100Factory Repairs 1,600Raw Materials Purchases 97,500Cash 35,600A) Prepare a cost of goods manufactured schedule (Assume all raw materials used were direct materials).B) Prepare an income statement through gross profitC) Prepare the current assets section of the balance sheet at June 30,2017



A) cost of goods manufactured schedule

Factory Insurance                                                  4,700

Factory Utilities                                                    29,100

Factory Machinery Depreciation                        19,000

Direct Labor                                                        147,750

Plant Manager`s Salary                                       65,600

Indirect Labor                                                      26,560

Factory Property Taxes                                         9,810

Factory Repairs                                                      1,600

Add Beginning Work in Process Inventory       26,800

Less Closing Work in Process Inventory          (22,300)

Cost of Goods Manufactured                         $308,620

B) income statement through gross profit

Sales Revenue                                                                   564,000

Less Sales Discounts                                                            (4,700)

Net Sales                                                                            559,300

Less Cost of Goods Sold :

Finished Goods Inventory                                98,200

Add Cost of Goods Manufactured                 308,620

Less Closing Finished Goods Inventory         (26,100)   (380,720)

Gross Profit                                                                         178,580

C) current assets section of the balance sheet at June 30,2017

Current Assets

Raw Materials Inventory      46,000

Work in Process Inventory   22,300

Finished Goods Inventory    26,100

Accounts Receivable            27,100

Cash                                      35,600

Total Current Assets           157,100


Raw Materials Consumed in Production Calculation

Open a Raw Materials T - Account as follows :

Debit :

Opening Balance                                                      $51,100

Purchases                                                                $97,500

Totals                                                                      $148,600

Credit :

Closing  Balance                                                      $46,000

Requisitioned for Production  (Balancing figure) $102,600

Totals                                                                      $148,600

In an attempt to have funds for a down payment in five years, james dupont plans to save $3,800 a year for the next five years. with an interest rate of 4 percent, what amount will james have available for a down payment after the five years?


The amount that James will have available for a down payment after the five years is $3648.

What is a down payment?

Down payment is the payment that is given in small divisions for a large amount of money. The cash upfront paid by the buyer in real estate transactions and other significant purchases is known as a down payment on a house.

For a home being used as a primary residence, down payments, which are typically a percentage of the purchase price.

To calculate the amount of available money for the down payment, we should first calculate the 4% of the amount of money which is $3,800

The interest rate is 4%

Calculate the interest rate of the money

4% of 3800 = 152

The amount is then subtracted by $3,800

3800 - 152 = 3648

Therefore, James will have $3648 available for the down payment after 5 years.

To learn more about the down payment, refer to the below link:


1. Find 4% of 3800: 152

2. 3800-152

3. James will have $3648 available for the down payment after the 5 years.

45) According to the text, the most logical budget-setting method in advertising is the method A) adaptive-control B) objective-and-task C) competitive-parity D) affordable E) percentage-of-sales 46) Which of the following is a disadvantage of using online, mobile, and social media for advertising? A) The costs are high B) Audience selectivity is low. C) The audience controls ad exposure. D) The interactive capabilities are low, I E) There is little scope for personalization


B) Objectives and Task Method As a result, the "objectives and task" method are regarded as one of the most logical budgeting strategies for advertising.

The objectives and goals of marketing and advertising are established using this strategy.

How does the objective task method work?

The objective task method, which is also known as the "objective and task" method, is a system in which a business decides how much money to put into its marketing budget based on specific goals rather than just on sales revenues or projections.

The competitive paritymethod works on the premise that competing businesses have comparable marketing objectives and rationally implement them. Therefore, if a competitor spends approximately 5% of net sales on advertising, the company will match that competitor's advertising budget.

To learn more about Objectives and Task Method here:


What are some forces that influence environmental uncertainty? Which typically has the greatest impact on uncertainty? --- environmental complexity or environmental dynamism? Why?



Environmental uncertainty is the degree to which and organization lacks factual or competent information concerning the internal and external factors affecting the operating environment of an organization.


Environmental complexity has the most impact on uncertainty because in a complex environment many external factors interact with the organization for example an automobile manufacturer requires highly skilled labour and they also have to deal with government regulations as they change. The maximum uncertainty occurs when there is a complex organization and an unstable environment.

Final answer:

Environmental uncertainty is influenced by forces such as technology, regulations, and competition. Both environmental complexity and dynamism can impact uncertainty, with complexity arising from various external factors while dynamism from the rate of change. The extent of impact depends on the specific context.


Environmental uncertainty refers to the lack of knowledge or predictability about the future state of the environment in which a business operates. There are several forces that can influence environmental uncertainty, such as technological advancements, government regulations, economic conditions, and competitive dynamics.

Environmental complexity refers to the number and diversity of external factors that affect a business. It includes factors like the number of competitors, customers, suppliers, and other stakeholders. Environmental dynamism, on the other hand, refers to the rate of change and unpredictability in the external environment.

Both environmental complexity and environmental dynamism can contribute to uncertainty, but the impact varies depending on the specific context. In some cases, environmental complexity may have a greater impact on uncertainty, as the presence of numerous factors and stakeholders can make it difficult to assess and predict outcomes. In other cases, environmental dynamism may be the primary driver of uncertainty as rapid changes in the external environment can make it challenging to anticipate and respond to new developments.

Learn more about Environmental uncertainty here:


In June 2007 General Motors (GM) posted a price-earnings ratio of 9.84. Ifthe price of the stock at that time was $36 per share, which of the following
must have been true?
a. GMâs earnings per share was 3.66.
b. GMâs coupon payment was $35 per year.
c. GMâs dividend yield for the year was 26%.
d. GMâs revenues that month were $366 million.



General Motors (GM)

If  the price of the stock at that time was $36 per share, the true statement is:

a. GM's earnings per share was 3.66.


a) Data and Calculations:

Price-earnings ratio = 9.84

Market price of stock at that time = $36 per share

Earnings per share = Market price per share/Price-earnings ratio

= $36/9.84 = 3.659

= $3.66


Price-earnings ratio = Market price per share/Earnings per share

= 9.84 ($36/$3.66)

​Alice, Betty, and Cathy are interested in forming a business venture. Alice is quite wealthy and is ready to contribute money to the venture. Betty has a degree in business from an excellent university, worked for five years as a manager in a major corporation, and currently is a leadership/management consultant. Cathy is a scientist who has developed a process that will, according to her, "revolutionize cancer treatment throughout the world." Alice, Betty, and Cathy believe it is in their best interest to form a general partnership. Do you agree? Is there a more appropriate form of business you might recommend?



I agree with that, because all of them have good bussiness ideas.

Final answer:

Even though a general partnership might work for Alice, Betty, and Cathy, a limited liability company (LLC) or a corporation might be more appropriate due to Alice's wealth, Betty's business knowledge, and Cathy's valuable scientific process. This way, they can better protect their individual assets, as well as the venture's funding and potential expansion.


While a general partnership might seem like a viable solution for Alice, Betty, and Cathy, it may not be the most optimal choice considering their individual circumstances and contributions. In a general partnership, every partner shares liability and financial commitment equally or according to their investment. Although this may initially seem fair, it might put Alice at risk since she's contributing the most financially. Instead, I'd recommend considering a limited liability company (LLC) or corporation.

In an LLC, Alice, Betty, and Cathy can limit their personal liabilities. This would allow Alice to protect her wealth while still contributing to the venture. In a corporation, the company is considered a separate legal entity. This structure can also be beneficial if they plan on seeking outside venture capital or looking into other ambitious expansion.

Remember, the final decision depends on various factors including tax considerations, business goals, and the level of desired legal protection. It is advisable to consult with a business advisor or attorney before deciding.

Learn more about Business Structures here: