A Mutual Fund Manager Has a $20 Million Portfolio with a Beta

Multiple Choice

A mutual fund manager has a $20 million portfolio with a beta of 1.00.The risk-free rate is 4.25%,and the market risk premium is 6.00%.The manager expects to receive an additional $25.50 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) 1.73
B) 1.82
C) 1.91
D) 2.00