Determining the average beta of the new stocks

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A mutual fund manager has a $20 million portfolio with a beta of 1.6. The risk-free rate is 5.5%, and the market risk premium is 7%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 16%. What should be the average beta of the new stocks added to the portfolio? Negative value, if any, should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to one decimal place.

Reference no: EM133069303

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