Question
Please Provide a step by step explanation on how the answer is found. Question::::: If a mutual fund manager has a $75.0 million portfolio with
- Please Provide a step by step explanation on how the answer is found.
Question::::: If a mutual fund manager has a $75.0 million portfolio with a beta of 1.40. The risk-free rate is 4.00%, and the market risk premium is 6.00%. The manager expects to receive an additional $25.0 million which she plans to invest in a number of stocks. After investing the additional funds, she wants to reduce the portfolio's risk level so that once the additional funds are invested the portfolio's required return will be 11.50%. What must theaverage beta of the new stocks addedto the portfolio be to achieve the desired required rate of return?
a. 0.75
b. 0.80
c. 0.93
d. 1.00
e. 1.25
- Please show formula on how the answer was found.
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