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

question 18

Multiple Choice

Assume that you hold a well-diversified portfolio that has an expected return of 12.0% and a beta of 1.20. You are in the process of buying 100 shares of Alpha Corp at $10 a share and adding it to your portfolio. Alpha has an expected return of 15.0% and a beta of 2.00. The total value of your current portfolio is $9,000. What will the expected return and beta on the portfolio be after the purchase of the Alpha stock? rp bp

• A) 11.69%; 1.22
• B) 12.30%; 1.28
• C) 12.92%; 1.34
• D) 13.56%; 1.41
• E) 14.24%; 1.48

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Definitions:

Workdays

The days on which an individual is scheduled to work, typically referring to the standard Monday through Friday schedule for full-time employment.

Developmentalists

Researchers who specialize in the study of how people grow and change over the course of their life, focusing on developmental psychology.

Systematic Observation

A methodical approach to data collection where the observer follows a strict set of guidelines to record behaviors, events, or other phenomena, often used in research to ensure reliability and validity.

Wilhelm Preyer

A German scientist recognized for his contributions to the study of child development and for being a pioneer in the field of developmental psychology.