Assume that you manage a $10.00 million mutual fund that has a beta of 1.25 and a 9.50% required return. The risk-free rate is 2.20%. You now receive another $15.00 million, which you invest in stocks with an average beta of 0.80. What is the required rate of return on the new portfolio? (Hint: You must first find the market risk premium, then find the new portfolio beta.) Do not round your intermediate calculations.

a. 9.17%

b. 8.71%

c. 7.92%

d. 7.45%

e. 9.65%