Consider the following information and then calculate the required rate of return for the Universal Investment Fund, which holds 4 stocks. The market's required rate of return is 13.25%, the risk-free rate is 7.00%, and the Fund's assets are as follows:
Stock
Investment
Beta
A
$ 200,000
1.50
B
$ 300,000
?0.50
C
$ 500,000
1.25
D
$1,000,000
0.75
A. 9.58%
B. 10.09%
C. 10.62%
D. 11.18%
E. 11.77%
Answer: E
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