Problem: A mutual fund manager has a 30 million portfolio with a beta of 1.5. The risk free rate is 4% and the market risk premium is 6%. 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 13%.
Required:
Question: What should be the average beta of the new stocks added to the portfolio?
Note: Please provide full description.