Problem 8.16 (CAPM and Portfolio Return) еВook Problem Walk-Through u have been managing a $5 million portfolio that has a beta of 1.15 and a required rate of return of 8.175%. The current risk-free rate is 3%. Assume that you receive another 500,000. If you invest the money in a stock with a beta of 0.85, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your swer to two decimal places.

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter8: Risk And Rates Of Return
Section: Chapter Questions
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8. Problem 8.16 (CAPM and Portfolio Return)
eBook
Problem Walk-Through
You have been managing a $5 million portfolio that has
beta of 1.15 and a required rate of return of 8.175%. The current risk-free rate is 3%. Assume that you receive another
$500,000. If you invest the money in a stock with a beta of 0.85, what will be the required return on your $5.5 million portfolio? Do not round intermediate calculations. Round your
answer to two decimal places.
%
Transcribed Image Text:8. Problem 8.16 (CAPM and Portfolio Return) eBook Problem Walk-Through You have been managing a $5 million portfolio that has beta of 1.15 and a required rate of return of 8.175%. The current risk-free rate is 3%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 0.85, 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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