You are a manger of the Lowell Fund and manage a portfolio of $21 million. Your portfolio has a beta of 1 2 and required return of 12 percent. You receive $4 million additional to invest in the portfolio, and you invest it in a stock with a beta of 16. The risk-free rate is 5 percent. What is the required return on the new portfolio? (Hint Calculate weighted average beta after new capital investment) OA. 10.78% OB. 1.26% OC 12.37% OD.3.81% OE. 9.42% OF. 5.80%
You are a manger of the Lowell Fund and manage a portfolio of $21 million. Your portfolio has a beta of 1 2 and required return of 12 percent. You receive $4 million additional to invest in the portfolio, and you invest it in a stock with a beta of 16. The risk-free rate is 5 percent. What is the required return on the new portfolio? (Hint Calculate weighted average beta after new capital investment) OA. 10.78% OB. 1.26% OC 12.37% OD.3.81% OE. 9.42% OF. 5.80%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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