ou have been managing a $5 million portfolio that has a beta of 1.25 and a required rate of return of 13.125%. The current risk-free rate is 5%. Assume that you receive another $500,000. If you invest the money in a stock with a beta .55, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places.
ou have been managing a $5 million portfolio that has a beta of 1.25 and a required rate of return of 13.125%. The current risk-free rate is 5%. Assume that you receive another $500,000. If you invest the money in a stock with a beta .55, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your answer to two decimal places.
Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter6: Risk And Return
Section: Chapter Questions
Problem 14P: You have observed the following returns over time:
Assume that the risk-free rate is 6% and the...
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