utual fund manager has a $80 million portfolio with a beta of 2.0. The risk-free rate is 4.3%, and the market risk premium is 5.5%. The manager expects to receive an additional $20 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio? options: A)0.8182 B)0.7364 C)0.8591 D)0.9000
utual fund manager has a $80 million portfolio with a beta of 2.0. The risk-free rate is 4.3%, and the market risk premium is 5.5%. The manager expects to receive an additional $20 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio? options: A)0.8182 B)0.7364 C)0.8591 D)0.9000
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 25P
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A mutual fund manager has a $80 million portfolio with a beta of 2.0. The risk-free rate is 4.3%, and the market risk premium is 5.5%. The manager expects to receive an additional $20 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio?
options:
A)0.8182
B)0.7364
C)0.8591
D)0.9000
E)0.7773
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