Question
A mutual fund manager has a $200,000,000 portfolio with a beta = 1.2. Assume that the risk-free rate is 4.0 percent and that the market
A mutual fund manager has a $200,000,000 portfolio with a beta = 1.2.
Assume that the risk-free rate is 4.0 percent and that the market risk premium equals 6.0 percent.
The manager expects to receive an additional $50,000,000 in funds soon. She wants to invest these funds in a variety of stocks
After making these additional investments, she wants the fund's return to be 11.5 percent.
What should be the average beta of the new stocks added to the portfolio?
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Fundamentals Of Financial Management
Authors: James Van Horne, John Wachowicz
13th Revised Edition
978-0273713630, 273713639
