Suppose You Hold a Portfolio Consisting of a $10,000 Investment

question 32

Multiple Choice

Suppose you hold a portfolio consisting of a $10,000 investment in each of 8 different common stocks.The portfolio's beta is 1.25.Now suppose you decided to sell one of your stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.35.What would the portfolio's new beta be?

• A)1.17
• B)1.23
• C)1.29
• D)1.36
• E)1.43

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Definitions:

Inverse Demand Function

A function that expresses the price of a good or service as a function of the quantity demanded, typically used in economics to determine pricing strategies.

Tax Imposed

A financial charge or levy placed by a government on individuals, transactions, or properties to raise revenue.

Grapefruit

A large, yellowish citrus fruit with a somewhat bitter and sour taste.

Civic Authorities

Government officials or bodies responsible for the governance and administration of a specific locality or city.