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What must the average beta of the new stocks be to achieve

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Problem 1: A mutual fund manager, has a $40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and the market risk premium is 6.00%. She expects to receive an additional $60 million, which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return?

Option 1: 1.68
Option 2: 1.76
Option 3: 1.85
Option 4: 1.94
Option 5: 2.04

Reference no: EM132856777

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