Hold a Portfolio Consisting of a $5,000 Investment in Each

question 5

Multiple Choice

hold a portfolio consisting of a $5,000 investment in each of 20 different stocksThe portfolio beta is equal to 1.12 You have decided to sell a coal mining stock (b = 1.00) at $5,000 net and use the proceeds to buy a like amount of a mineral rights company stock (b = 2.00) What is the new beta of the portfolio?

• A) 1.1139
• B) 1.1700
• C) 1.2311
• D) 1.2927
• E) 1.3573

---

Definitions:

Purchases

The total amount of goods bought by a business for resale or production during an accounting period.

Gallon

A unit of volume for liquid measure in the United States, equal to 3.785 liters.

Gas

A state of matter characterized by high compressibility and expansion to fill any container, often used as a fuel.

Twenty-Dollar Bill

Currency note of the United States valued at twenty dollars, featuring the portrait of President Andrew Jackson.