Problema mutual fund manager has a 40 million portfolio, Ask an Expert

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Problem:

A mutual fund manager has a $40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and the market risk premium (RPM) is 6.00%. The manager expects to receive an additional $60 million which she plans to invest in additional stocks. After investing the additional funds she wants the fund's required and expected return to be 13.00%.

Required:

Question: What must the average beta of the new stocks be in order to achieve the target required rate of return?

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91168435

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