Sinclair Fund has invested in securities of five corporations. The market value of each of the investments and the beta of the corporations is as follows:
Stock Investment Beta
1 $6 million 0.50
2 $5 million 0.80
3 $4 million 1.00
4 $3 million 1.40
5 $2 million 2.00
The risk free rate is 7 percent and the return on the market portfolio is 12 percent
a) What is the portfolio's beta coefficient?
b) What is the fund's required rate of return?