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What is the hedge fund required rate of return

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Reference no: EM132534752

Question 1: Hedge Funds 'R Us has a $50 million portfolio consisting of two stocks: Highly Leveraged Retailer (HLR) with a beta of 4.95 and Steady Eddie Utility (SEU) with a beta of 0.85. The risk-free rate is 3.75%, and the market risk premium is 6.50%. If Hedge Funds 'R Us invests $15 million in HLR and the balance of its funds in SEU, what it the Hedge Fund's required rate of return according to CAPM? Enter your answer rounded to two decimal places. Do not enter % in the answer box. For example, if your answer is 0.12345 or 12.345% then enter as 12.35 in the answer box.

Reference no: EM132534752

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