Chapter 12 Risk, Return & Capital Budgeting 57. A stock has a beta of 2.35, the market risk premium is 8%, and the risk-free rate is 4%. What is the lowest return the company should accept on a new investment? 58. A mutual fund returns 17%. If the risk-free rate is 3% and the beta of the fund is 2.00, what is the implied market risk premium? 59. What is the beta of a 3-stock portfolio including 30% of stock A with a beta of 0.90, 40% of stock B with a beta of 1.05, and 30% of stock C with a beta of 1.73? 60. An investor wishes to invest equal amounts in three stocks and to achieve a portfolio beta of 1.2. If stock A has a beta of 0.9 and stock B has a beta of 1.5, what must be the beta of stock C? 61. A project has a beta of 1.27, the risk-free rate is 3.95%, and the market rate of return is 9.35%. What is the project's expected rate of return? 62. Calculate the risk premium on stock C given the following information: risk-free rate = 5.50%, market return= 13.50%, stock C's beta = 1.80. 63. An investor expects a return of 23% on his portfolio with a beta of 1.25. If the expected market risk premium increases from 8% to 10%, what return should he now expect on the portfolio? 64. What happens to the expected portfolio return if the portfolio beta increases from 1.0 to 1.5, the risk-free rate decreases from 6.2 to 5.2%, and the market risk premium increases from 9.2 to 10.2%? 65. An investor divides her portfolio into three equal parts, with one part in Treasury bills, one part in a market index, and one part in a mutual fund with beta of 1.32. What is the beta of the investor's overall portfolio?