8. Problem 8.16 (CAPM and Portfolio Return)

You have been managing a $5 million portfolio that has a beta of 0.85 and a required rate of return of 8.675%. The current risk-free rate is 4%. Assume that you receive another $500,000. If you invest the money in a stock with a beta of 0.65, 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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