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Tom is managing a $10 million portfolio that has a beta of 1.25 and required rate of return of 12.6%. the current risk free rate is 4.7%. assume that tom receives another $5 million. of don invest the money in a stock with a beta of 0.85, what will be the required return on tom's 15 million portfolio?

(Hint: find the market risk premium (rm-rrf) first using the information if the original portfolio, next find the new portfolio beta and then the required rate of return).

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92740400

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