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