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You have been managing a $5 million portfolio that has a beta of 1.25 and a required rate of return of 12%. The current risk-free rate is 5.25%. Please answer the following three questions: What is the market risk premium from the CAPM?Assume that you receive another $500,000 ($0.5 million) and invest the money in a stock with a beta of 1.00. What is the portfolio beta of your new portfolio ($5.5 million in total)?. What will be the required return on your new portfolio?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92838529

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