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A mutual fund manager has a $80 million portfolio with a beta of 2.0. The risk-free rate is 5.1%, and the market risk premium is 5.5%. The manager expects to receive an additional $20 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio? 0.1000 0.0818 0.0955 0.0909 0.0864

A mutual fund manager has a $80 million portfolio with a beta of 2.0. The risk-free rate is 5.1%, and the market risk premium is 5.5%. The manager expects to receive an additional $20 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio? 0.1000 0.0818 0.0955 0.0909 0.0864

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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A mutual fund manager has a $80 million portfolio with a beta of 2.0. The risk-free rate is 5.1%, and the market risk premium is 5.5%. The manager expects to receive an additional $20 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio? 0.1000 0.0818 0.0955 0.0909 0.0864
Transcribed Image Text:A mutual fund manager has a $80 million portfolio with a beta of 2.0. The risk-free rate is 5.1%, and the market risk premium is 5.5%. The manager expects to receive an additional $20 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio? 0.1000 0.0818 0.0955 0.0909 0.0864
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