Suppose that a mutual fund manager has a $15 million portfolio with a beta of 2.2. Also suppose that the risk free rate is 4.5% and the ma risk premium is 7%. The manager expects to receive an additional $5 million, which is to be invested in a number of new stocks to add to the portfolio. After th stocks are added, the manager would like the fund's required rate of return to be 18.5%. For notation, let r represent the required return, let TRF represent the risk free rate, let b represent the beta of a group of stocks, and rm represent the market return. According to the video, which equation most closely describes the security market line (SML)? r=rRF + bx (M+ TRF) r = TRF-bx (TM - TRF) r=rRF + bx (rM - TRF) b TM-TRF Or = TRF + Hint: Recall that the manager wants the new required rate of return for the portfolio to remain at 18.5%. Using the equation you just identified, and plugging in the relevant information, yields a beta of the portfolio, after the new stocks have b added, of approximately True or False: The beta for the portfolio after the stocks have been added is the weighted average of the beta before the stocks where a the beta of the new stocks that are being added (weighted as a percentage of the total funds invested). True False

Suppose that a mutual fund manager has a $15 million portfolio with a beta of 2.2 . Also suppose that the risk free rate is 4.5% and the m risk premium is 7%. The manager expects to recelve an additional $5 million, which is to be invested in a number of new stocks to add to the portfolio. After th stocks are added, the manager would like the fund's required rate of return to be 18.5%. For notation, let r represent the required return, let rRF represent the risk free rate, let b represent the beta of a group of stocks, and rm represent the market return. According to the video, which equation most closely describes the security market line (SML)? r=rRF+b(rM+rRF)r=rRFb(rMrRF)r=rRF+b(rMrRF)r=rRF+rMrNb Hint: Recall that the manager wants the new required rate of return for the portfolio to remain at 18.5%. Using the equation you just identified, and plugging in the relevant information, yields a beta of the portfolio, after the new stocks have added, of approximately True or False: The beta for the portfolio after the stocks have been added is the weighted average of the beta before the stocks where the beta of the new stocks that are being added (weighted as a percentage of the total funds invested). True False