Problem:
Assume that you manage a $10.00 million mutual fund that has a beta of 1.05 and a 9.50% required return. The risk-free rate is 2.20%. You now receive another $4.50 million, which you invest in stocks with an average beta of 0.65.
Required:
Question: What is the required rate of return on the new portfolio?
Note: Give you opinion citing relevant ethical principles.