The $10.00 million mutual fund Henry manages has a beta of 1.05 and a 9.50% required return. The risk-free rate is 4.20%. Henry now receives another $5.00 million, which he invests in stocks with an average beta of 0.65. What is the required rate of return on the new portfolio? (Hint: You must first find the market risk premium, then find the new portfolio beta.)
A. 8.83%
B. 9.05%
C. 9.27%
D. 9.51%
E. 9.74%
Answer: A
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On December 1, 2018, Garden Products borrowed $92,000 on a 5%, 10-year note with annual installment payments of $9200 plus interest due on December 1 of each subsequent year. Which of the following describes the first installment payment made on December 1, 2019? (Round your answer to the nearest whole number.)
A) $9200 principal plus $4600 interest B) $9200 principal plus $460 interest C) $9200 principal plus $9200 interest D) $4600 interest only
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