As an investor, you are holding the following investments: Stock Amount Invested Beta A $40 million 1.4 B 30 million 1.0 C 60 million 0.8 Page 3 of 3 You are planning to sell the holdings of Stock B. The money from the sale will be used to purchase another $20 million of Stock A and another $10 million of Stock C. The risk-free rate is 7 percent and the market risk premium is 6.5 percent. How many percentage points higher will the required return on the portfolio be after you complete this transaction?

Answer rating: 100% (QA)

CAPM formula Required return Risk free ratebeta x Risk premium Ret... View the full answer