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QUESTION

The risk-free rate is 6.7 percent and the market risk premium is 5 percent. Assume that required returns are based on the CAPM.

The risk-free rate is 6.7 percent and the market risk premium is 5 percent. Assume that required returns are based on the CAPM. Your $1 million portfolio consists of $ 161 ,000 invested in a stock that has a beta of 0.5 and the remainder invested in a stock that has a beta of 0.6 . What is the required return on this portfolio? Enter your answer to the nearest .1%. Do not use the % sign in your answer, thus 12.1% is 12. 1 rather than 12.1% or .121.

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