Sean-Ruben manage a $10.00 million mutual fund which has a beta of 1.05 and a 9.50%...

80.2K

Verified Solution

Question

Finance

Sean-Ruben manage a $10.00 million mutual fund which has abeta of 1.05 and a 9.50% required return. The risk-free rate is4.20%. Sean-Ruben now receives another $5.00 million, which heinvests in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio? (Hint:You must first find the market risk premium, then find the newportfolio beta.)

Answer & Explanation Solved by verified expert

3.8 Ratings (359 Votes)

Information provided Proportion of debt 65 Proportion of equity 35 Cost of debt 9 Information provided Amount invested in old portfolio 10 million Amount invested in addition to the portfolio See Answer

Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:

Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!

Become a Member

Transcribed Image Text

Sean-Ruben manage a $10.00 million mutual fund which has abeta of 1.05 and a 9.50% required return. The risk-free rate is4.20%. Sean-Ruben now receives another $5.00 million, which heinvests in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio? (Hint:You must first find the market risk premium, then find the newportfolio beta.)

Sean-Ruben manage a $10.00 million mutual fund which has a beta of 1.05 and a 9.50%...

80.2K

Verified Solution

Question

Finance

Answer & Explanation Solved by verified expert

Get Answers to Unlimited Questions

Membership Benefits:

Transcribed Image Text

Other questions asked by students

Titan Mining Corporation has 7.2 million shares of common stock outstanding, 260,000 shares of 4.4 percent...

Consider the following measurements of blood hemoglobin concentrations (in g/dL) from three human populations at different geographic...

Female with stubble bristles crossed to a a male with stubble bristles Info: SB-Stubble Bristles + Wild Type Female 422...

Phospholipids form the main fabric of the plasma membrane One feature of phospholipids is that...

1 In the arrangement shown in Fig 1 24 the masses m of the bar...

Without actually performing the calculations indicated, choose to how many significant digits the answer to...

y 0 0001x 0 01 x y Find the zeros X Use the vertex and...

From the e-Activity, evaluate at least two companies financial statements that have received a negative...

Exercise 7-9 Variable and Absorption Costing Unit Product Costs and Income Statements [LO7-1,...

The balance sheet data of Pina Company at the end of 2025 and 2024 follow....

Bond Valuation with Semiannual Payments Renfro Rentals has issued bonds that have a 9% coupon...

Your Aunt Annie is asking for your advice. She will receive a 4-year perpetuity star)ng...