A Mutual Fund Manager Has a $40 Million Portfolio with a Beta

question 20

Multiple Choice

A mutual fund manager has a $40 million portfolio with a beta of 1.00.The risk-free rate is 4.25%,and the market risk premium is 6.00%.The manager expects to receive an additional $29.50 million which she plans to invest in additional stocks.After investing the additional funds,she wants the fund's required and expected return to be 13.00%.What must the average beta of the new stocks be to achieve the target required rate of return? Do not round your intermediate calculations.

• A) 2.08
• B) 2.18
• C) 2.60
• D) 1.66
• E) 1.87

---

Definitions:

Low-Context Cultures

Cultures in which communication is expected to be explicit and direct, with less reliance on context, non-verbal cues, and background knowledge to convey meaning.

Adapting the Message

The process of modifying communication to better suit the audience or context in which it is received.

Communication Translation Technologies

Technologies designed to convert spoken or written content from one language into another, facilitating understanding across different languages.

Cultural Biases

Prejudices or predispositions toward certain cultures, often resulting from one's own cultural background and experiences.