Question: A money manager is holding the following portfolio:
|
Stock
|
Amount Interested
|
Beta
|
|
1
|
$300,000
|
0.6
|
|
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 her holdings of Stock one & use the proceeds to buy more shares of Stock four. Determine the portfolio's required rate of return following this change?