Use stock beta to find required return


Question: You have been managing a 5 million dollar portfolio that has a beta of 1.25 and a needed rate of return of 12%. The current risk-free rate is 5.25 percent. Suppose that you receive another $500000. If you invest the money in a stock with a beta of 0.75, Determine the required return on your $5.5 million portfolio?

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Finance Basics: Use stock beta to find required return
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