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Required rate of return on the new portfolio

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Reference no: EM132726098

Assume that you manage a $100 million mutual fund that has a beta of 1.05 and a 9.50% required return. The risk-free rate is 4.00%.

You now receive another $60 million, which you invest in stocks with an average beta of 0.85

What is the required rate of return on the new portfolio?

(Hint: You must first calculate the market risk premium, then find the new portfolio beta.)

Reference no: EM132726098

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