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Suppose you manage the $4 million fund that consists of four stocks with the following investments:
Stock Investment Beta
A $400,000 1.5
B 600,000 -0.5
C 1,000,000 1.25
D 2,000,000 0.75
Total $4,000,000
If the market’s required rate of return is 14% and the risk-free rate is 6%, what is the bond’s required rate return?