Question

In: Finance

Ted, a mutual fund manager, has a $40 million portfolio with a beta of 1.00. The...

Ted, 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%. Ted expects to receive an additional $60 million, which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return?

*Show the formula you used and formula inputs.

Solutions

Expert Solution

+

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

Ted, a mutual fund manager, has a $40 million portfolio with a beta of 1.00. The...
Ted, 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 7.00%. Ted expects to receive an additional $60 million, which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? *Show the formula...
A mutual fund manager has a $40 million portfolio with a beta of 1.00. The risk-free...
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%?
A mutual fund manager has a $40.00 million portfolio with a beta of 1.00. The risk-free...
A mutual fund manager has a $40.00 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 $29.50 million which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? Do not round...
A mutual fund manager has a $40.00 million portfolio with a beta of 1.00. The risk-free...
A mutual fund manager has a $40.00 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 $29.50 million which she plans to invest in additional stocks. After investing the additional funds, she wants the fund's required and expected return to be 13.00%. What must the average beta of the new stocks be to achieve the target required rate of return? Do not round...
PORTFOLIO BETA A mutual fund manager has a $20 million portfolio with a beta of 1.50....
PORTFOLIO BETA A mutual fund manager has a $20 million portfolio with a beta of 1.50. The risk-free rate is 6.00%, and the market risk premium is 5.0%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 12%. What should be the average beta of the new stocks added to the portfolio? Do not round intermediate calculations....
A mutual fund manager has a $20 million portfolio with a beta of 2.7. The risk-free...
A mutual fund manager has a $20 million portfolio with a beta of 2.7. The risk-free rate is 2.5%, and the market risk premium is 9%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 25%. What should be the average beta of the new stocks added to the portfolio? Negative value, if any, should be indicated...
A mutual fund manager has a $20 million portfolio with a beta of 1.7. The risk-free...
A mutual fund manager has a $20 million portfolio with a beta of 1.7. The risk-free rate is 3.5%, and the market risk premium is 7%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 14%. What should be the average beta of the new stocks added to the portfolio? Negative value, if any, should be indicated...
A mutual fund manager has a $20 million portfolio with a beta of 2.8. The risk-free...
A mutual fund manager has a $20 million portfolio with a beta of 2.8. The risk-free rate is 4.5%, and the market risk premium is 7%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 22%. What should be the average beta of the new stocks added to the portfolio? Negative value, if any, should be indicated...
A mutual fund manager has a $20 million portfolio with a beta of 2.00. The risk-free...
A mutual fund manager has a $20 million portfolio with a beta of 2.00. The risk-free rate is 8.00%, and the market risk premium is 4.0%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 18%. What should be the average beta of the new stocks added to the portfolio? Negative value, if any, should be indicated...
A mutual fund manager has a $20 million portfolio with a beta of 2.8. The risk-free...
A mutual fund manager has a $20 million portfolio with a beta of 2.8. The risk-free rate is 5.5%, and the market risk premium is 7%. The manager expects to receive an additional $5 million, which she plans to invest in a number of stocks. After investing the additional funds, she wants the fund's required return to be 23%. What should be the average beta of the new stocks added to the portfolio? Negative value, if any, should be indicated...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT