David is the money manager of a R4,000,000 investment fund. The fund consists of four shares with the following investments and betas:
Share
|
Share
|
Investment
|
Beta
|
|
A
|
R400,000
|
1,50
|
|
B
|
R600,000
|
-0,50
|
|
C
|
R1,000,000
|
1,25
|
|
D
|
R2,000,000
|
0,75
|
If the market required rate of return is 14% and the risk-free rate is 6%, what is the fund's required rate of return?
1. 6%
2. 8%
3. 12%
4. 14%
Please provide the answer and calculation, thanks so much.