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CAPM and portfolio return
You have been managing a $5 million portfolio that has a beta of 1.15 and a required rate of return of 11%. The current risk-free rate is 4.75%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.30, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places.
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Which of the following is a true regarding the appropriate tax rate to be used in the WACC?
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