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Ken Howard has a two-stock portfolio consisting of Acton Inc. and Boron Corp. Assume the following conditions exist. Return on the market = 13% 3-month
Ken Howard has a two-stock portfolio consisting of Acton Inc. and Boron Corp. Assume the following conditions exist.
Return on the market = 13%
3-month Treasury bill rate = 6%
Acton's beta = 1.15
Boron's beta = 1.40
Market value of Ken's investment in Acton = $125,000
Market value of Ken's investment in Boron = $250,000
Total value of Kens portfolio $375,000
What is Ken's required rate of return for the overall portfolio?
| a. | 15.24% |
| b. | 14.93% |
| c. | 23.12% |
| d. | 20.90% |
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