What would be the portfolio’s required rate of return following this change?

Posted by: Pdfprep Category: GLO_CWM_LVL_1 Tags: , ,

A Portfolio manager is holding the following portfolio:

The risk free rate of return is 6% and the portfolio’s required rate of return is 12.5%. The manager would like to sell all of his holdings in stock A and use the proceeds to purchase more shares of stock D.

What would be the portfolio’s required rate of return following this change?
A . 13.63%
B . 10.29%
C . 11.05%
D . 12.52%

Answer: A