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    A manager is holding a portfolio

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    A manager is holding a portfolio:

    Stock Amount Invested Beta

    1 300,000 .6

    2 300,000 1.0

    3 500,000 1.4

    4 500,000 1.8

    The risk free rate is 6% and the portfolio's required rate of return is 12.5%. The manager would like to sell all of the holdings of stock 1 and use the proceeds to buy more shares of stock 4. What would be the portfolio's required rate of return with this change?

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    Solution Preview

    A manager is holding a portfolio:

    Stock Amount Invested Beta

    1 300,000 .6

    2 300,000 1.0

    3 500,000 1.4

    4 500,000 1.8

    The risk free rate is 6% and the portfolio's required rate of return is 12.5%. The manager would like to sell all ...

    Solution Summary

    This solution is comprised of a detailed explanation to answer what would be the portfolio's required rate of return with this change.

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