You now receive the other 500 million which you invest in

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Assume that you manage a $10.00 million mutual fund that has a beta of 1.05 and a 9.50% required return. The risk-free rate is 4.20%. You now receive another $5.00 million, which you invest in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio? (Hint: You must first find the market risk premium, then  find the new portfolio beta.)

a. 8.83%

b. 9.05%

c. 9.51%

d. 9.74%

e. 9.27%

Reference no: EM13477320

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