Hazel Morrison, a mutual fund manager, has a $40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and

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Hazel Morrison, a mutual fund manager, has a $40 million portfolio with a beta of 1.00. The risk-free rate is 4.25%, and

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Hazel Morrison, a mutual fund manager, has a $40 millionportfolio with a beta of 1.00. The risk-free rate is 4.25%, and themarket risk premium is 6.00%. Hazel expects to receive anadditional $60 million, which she plans to invest in additionalstocks. After investing the additional funds, she wants the fund'srequired and expected return to be 13.00%. What must the averagebeta of the new stocks be to achieve the target required rate ofreturn?
a. 1.85b. 2.04c. 1.94d. 1.76e. 1.68
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