Author Question: A mutual fund manager has a $26 million portfolio with a beta of 1.1. The risk-free rate is 5.3%, ... (Read 43 times)

xxxxxxxxxxxx · **on:** Aug 7, 2023

A mutual fund manager has a $26 million portfolio with a beta of 1.1. The risk-free rate is 5.3%, and the market risk premium is 7%. The manager expects to receive an additional $29 million, which they plan to invest in additional stocks. After investing the additional funds, they want the fund’s required and expected return to be 16%. What must the average beta of the new stocks be to achieve the target required rate of return?

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1.65

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1.72

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1.80

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1.91

hiyayyay · **Reply #1 on:** Aug 7, 2023

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