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Business, 20.09.2021 02:00 leilaford2003

1. 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 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 combined fund’s required return to be 13.00%. What must the average beta of the new stocks be to achieve the required rate of return of 13%?

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