Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text: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 1.6. 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%
B. 1.26%
OC 12.37%
OD.3.81%
ⒸE. 9.42%
OF. 5.80%
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