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What is the required return on the new portfolio

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Reference no: EM131633251

Question - You are a manger of the Lowell Fund and manage a portfolio of $21 million. Your portfolio has a beta of 1.2 and required return of 12 percent. You receive $4 million additional to invest in the portfolio, and you invest it in a stock with a beta of 1.6. The risk-free rate is 5 percent. What is the required return on the new portfolio? (Hint: Calculate weighted average beta after new capital investment.)

A. 9.42%

B. 12.37%

C. 3.81%

D. 5.80%

E. 10.78%

F. 1.26%

Reference no: EM131633251

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