Your Portfolio Consists of $100,000 Invested in a Stock Which

question 79

Multiple Choice

Your portfolio consists of $100,000 invested in a stock which has a beta = 0.8, $150,000 invested in a stock which has a beta = 1.2, and $50,000 invested in a stock which has a beta = 1.8. The risk-free rate is 7 percent. Last year this portfolio had a required rate of return of 13 percent. This year nothing has changed except for the fact that the market risk premium has increased by 2 percent (two percentage points) . What is the portfolio's current required rate of return?

• A) 5.14%
• B) 7.14%
• C) 11.45%
• D) 15.33%
• E) 16.25%

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Definitions:

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