Assume That You Hold a Well-Diversified Portfolio That Has an Expected

question 126

Multiple Choice

Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Omega Corp at $10 a share and adding it to your portfolio. Omega has an expected return of 13.0% and a beta of 1.50. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Omega stock?

• A) 10.64%; 1.17
• B) 11.20%; 1.23
• C) 11.76%; 1.29
• D) 12.35%; 1.36
• E) 12.97%; 1.42

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Definitions:

Woven Textiles

Materials produced by interlacing threads or fibers in a systematic pattern, used for clothing, furnishings, and other products.

Neolithic Peoples

Early human societies in the Neolithic era, characterized by the beginning of farming, settling in communities, and the use of stone tools.

Paleolithic

Pertaining to the initial phase of the Stone Age, marked by the employment of basic, chipped stone implements by ancient humans.

Mesolithic

The middle part of the Stone Age, between the Paleolithic and Neolithic periods, characterized by the development of smaller stone tools and the beginnings of settled communities.