What is the market risk premium?

-You are an investor in common stock, and you currently hold a well-diversified portfolio which has a required return of 12%, a beta of 1.2, and a total value of $9,000.-

- You plan to increase your portfolio by buying 100 shares of AT&E at $10 a share. AT&E has a beta of 1.8.

- The current T-bill rate is 5%

Select one:

a. 9.0%

b. 5.83%

c. 6.67%

d. 4.0%

e. 12.15%

What will be the required return of your portfolio after you purchase the new stock?

Select one:

a. 16.17%

b. 12.54%

c. 12.35%

d. 9.00%

e. 10.67%