stions Assume that you manage an $11.00 million mutual fund that has a beta of 1.25 and a 9.50% required return. The risk-free rate is 2.20%. You now receive another $14.00 million, which you invest in stocks with an average beta of 0.70. What is the required rate of return on the new portfolio? (Hint: You must inst find the market risk premium, then find the new portfolio beta) Do not round your intermediate calculations.

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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3
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18
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47
Assume that you manage an $11.00 million mutual fund that has a beta of 1.25 and a 9.50% required return. The risk-free rate is 2.20%. You now receive
another $14.00 million, which you invest in stocks with an average beta of 0.70. What is the required rate of return on the new portfolio? (Hint: You must
first find the market risk premium, then find the new portfolio beta.) Do not round your intermediate calculations.
0936
Ob 8.82
0c8.604
d7.70%
0216
Transcribed Image Text:M 3 19. 18 Questions 47 Assume that you manage an $11.00 million mutual fund that has a beta of 1.25 and a 9.50% required return. The risk-free rate is 2.20%. You now receive another $14.00 million, which you invest in stocks with an average beta of 0.70. What is the required rate of return on the new portfolio? (Hint: You must first find the market risk premium, then find the new portfolio beta.) Do not round your intermediate calculations. 0936 Ob 8.82 0c8.604 d7.70% 0216
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