Hazel Morrison, a Mutual Fund Manager, Has a $40 Million

Multiple Choice

Hazel Morrison, a mutual fund manager, has a $40 million portfolio with a beta of 1.00.The risk-free rate is 4.25%, and the market risk premium is 6.00%.Hazel expects to receive an additional $60 million, which she plans to invest in additional stocks.After investing the additional funds, she wants the fund's required and expected return to be 13.00%.What must the average beta of the new stocks be to achieve the target required rate of return?

A) 1.68
B) 1.76
C) 1.85
D) 1.94
E) 2.04