Assume that the risk-free rate is 5 percent and the market risk premium is 5 percent. A money manager has $10 million invested in a portfolio that has a required return of 12 percent. The manager plans to sell $4 million of stock with a beta of 1.6 that is part of the portfolio. She plans to reinvest this $4 million into another stock that has a beta of 0.8. If she goes ahead with this planned transaction, what will be the required return of her new portfolio?

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The Answer of Assume that the risk-free rate is 5 percent and the market risk premium is 5 percent. A money manager has $10 million invested in a portfolio that has a required return of 12 percent. The manager plans to sell $4 million of stock with a beta of 1.6 that is part of the portfolio. She plans to reinvest this $4 million into another stock that has a beta of 0.8. If she goes ahead with this planned transaction, what will be the required return of her new portfolio?

Assume That the Risk-Free Rate Is 5 Percent and the Market