Your Portfolio Consists of $100,000 Invested in a Stock Which

Multiple Choice

Your portfolio consists of $100,000 invested in a stock which has a beta = 0.8, $150,000 invested in a stock which has a beta = 1.2, and $50,000 invested in a stock which has a beta = 1.8. The risk-free rate is 7 percent. Last year this portfolio had a required rate of return of 13 percent. This year nothing has changed except for the fact that the market risk premium has increased by 2 percent (two percentage points) . What is the portfolio's current required rate of return?

A) 5.14%
B) 7.14%
C) 11.45%
D) 15.33%
E) 16.25%