Multiple Choice
Assume that you manage a $10.75 million mutual fund that has a beta of 1.05 and a 9.50% required return.The risk-free rate is 4.20%.You now receive another $5.25 million,which you invest in stocks with an average beta of 0.65.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.)
A) 9.07%
B) 9.30%
C) 9.53%
D) 9.77%
Correct Answer:
Verified
Correct Answer:
Verified
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