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As an investor, you are holding the following investments: Stock Amount Invested Beta A $40 million 1.4 B 30 million 1.0 C 60 million 0.8
As an investor, you are holding the following investments: Stock Amount Invested Beta A $40 million 1.4 B 30 million 1.0 C 60 million 0.8
You are planning to sell the holdings of Stock B. The money from the sale will be used to purchase another $20 million of Stock A and another $10 million of Stock C. The risk-free rate is 7 percent and the market risk premium is 6.5 percent. How many percentage points higher will the required return on the portfolio be after you complete this transaction?
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