A portfolio manager is holding the following investments: Stock Amount Invested Beta X $10 million 1.4...

A portfolio manager is holding the following investments:

Stock	Amount Invested	Beta
X	$10 million	1.4
Y	20 million	1.0
Z	40 million	0.8

The manager plans to sell his holdings of Stock Y. The money from the sale will be used to purchase another $15 million of Stock X and another $5 million of Stock Z. The risk-free rate is 5% and the market risk premium is 5.5%. How many percentage points higher will the required return on the portfolio be after he completes this transaction?

		0.07%
		0.18%
		0.39%
		0.67%
		1.34%

Expert Solution

ekkarill92 answered 1 year ago

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