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You manage the MSB portfolio of $30 million. The portfolio has a beta of 1.2 and a required return of 12 percent. MSB receives an $6 million additional to invest in the portfolio. You invest this new money in a stock with a beta of 1.4. The risk-free rate is 5 percent. What is the required return on the total portfolio after the addition of new funds? Choices a) 12.19% b) 12.49% c) 12.88% d) 13.33% e) 13.86% f) 14.43% g) 15.06% h) 15.73%
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