(Quantitative Question) Assume that you manage a $10.75 million mutual fund that has a beta of 1.05 and a 9.50% required (expected) return. The risk-free rate is 496. You now receive another $5.7 million, which you invest in stocks with an average beta of 0.65. What is the expected return on the new portfolio?

EBK CFIN
6th Edition
ISBN:9781337671743
Author:BESLEY
Publisher:BESLEY
Chapter8: Risk And Rates Of Return
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QUESTION 3
(Quantitative Question) Assume that you manage a $10.75 million mutual fund that has a beta of 1.05 and a 9.50% required (expected) return. The risk-free rate is
496. You now receive another $5.7 million, which you invest in stocks with an average beta of 0.65. What is the expected return on the new portfolio?
Write the answer both
in the space provided and on the empty pages on which you will also show your work.
Transcribed Image Text:QUESTION 3 (Quantitative Question) Assume that you manage a $10.75 million mutual fund that has a beta of 1.05 and a 9.50% required (expected) return. The risk-free rate is 496. You now receive another $5.7 million, which you invest in stocks with an average beta of 0.65. What is the expected return on the new portfolio? Write the answer both in the space provided and on the empty pages on which you will also show your work.
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