You have been managing a $5 million portfolio that has a beta of 1.2 and a required rate of return of 12%. The risk-free rate is 6%. You now receive another $1 million and invest in stocks with an average beta of 0.50. What will be the required rate of return on your new portfolio (now you have $6 million in total)?

Question 14 options:

A)

11.4%

B)

12.0%

C)

11.6%

D)

11.8%

E)

11.2%