You have been managing a $5 million portfolio that has a beta of 1.45 and a required rate of return of 16.325%. The currentrisk-free rate is 4%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.15, whatwill be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to twodecimal places.%

Portfolio beta = 1.45 Required return = 16.325% Risk free rate = 4% As per formula…

Answered: a réquired rate of You have been…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 11P

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Similar questions

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You have been managing a $5 million portfolio that has a beta of 1.35 and a required rate of return of 15.475%. The current risk-free rate is 4%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 1.05, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places.
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You are considering investing $1,000 in a T-bill that pays 0.05 and a risky portfolio, P, constructed with two risky securities, X and Y. The weights of X and Y in P are 0.60 and 0.40, respectively. X has an expected rate of return of 0.14 and variance of 0.01, and Y has an expected rate of return of 0.10 and a variance of 0.0081.What would be the dollar values of your positions in X and Y, respectively, if you decide to hold 40% of your money in the risky portfolio and 60% in T-bills? A. $100; $240 B. $360; $240 C. $240; $160 D. Cannot be determined. E. $240; $360

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