The $10.00 million mutual fund Henry manages has a beta of 1.05 and a 9.50% required return. The risk-free rate is 4.20%. Henry now receives another $12.25 million, which he invests in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio? (Hint:You must first find the market risk premium, then find the new portfolio beta.)

Select the correct answer.

a. 8.18% b. 8.39% c. 8.25% d. 8.46% e. 8.32%