Company X has a beta of 0.70, while Company Y's beta is 1.20. The required return on the stock market is 11.00%, and the risk-free rate is 4.25%. A fund has $3500 invested in company X stock and $4500 invested in the stock of company Y. (6 marks) a) What is fund's required rate of return? b) Suppose you sell all of your holdings in stock Y and invest $4500 in stock Z having beta of 1.5. What is the fund's new beta after this transaction?

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