Suppose you are the money manager of a $4.08 million investment fund. The fund consists of 4 stocks with the following investments and betas:
STOCK INVESTMENT BETA
a $480,000 1.50
b 480,000 - 0.50
c 1,220,000 1.25
d 1,900,000 0.75
If the market's required rate of return is 11% and the risk-free rate is 5%, what is the fund's required rate of return?