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

question 38

Multiple Choice

You hold a diversified portfolio consisting of a $10,000 investment in each of 20 different common stocks . The portfolio beta is equal to 1.2. You have decided to sell one of your stocks which has a beta equal to 0.7 for $10,000. You plan to use the proceeds to purchase another stock which has a beta equal to 1.4. What will be the beta of the new portfolio?

• A) 1.165
• B) 1.235
• C) 1.250
• D) 1.284
• E) 1.333

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Definitions:

Psychoanalysis

A therapeutic approach and theory of personality developed by Sigmund Freud, focusing on unconscious motivations and conflicts.

Labeling

The process of classifying and naming individual behaviors or groups in a way that can influence perceptions and attitudes towards them.

Diagnosis

The identification of the nature of an illness or other problem by examination of the symptoms.

Cross-lagged Correlational Study

A longitudinal research design used to assess the directionality of relationships between two or more variables over time.