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

question 77

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 1.55.What would the portfolio's new beta be? Do not round your intermediate calculations.

• A) 1.60
• B) 1.32
• C) 1.58
• D) 1.61
• E) 1.38

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Definitions:

Cognitive Errors

Faulty patterns of thinking that contribute to misinterpretations of reality or to emotional distress.

Beck

Refers to Aaron T. Beck, a psychiatrist known for his work in developing cognitive therapy, now known as cognitive-behavioral therapy (CBT).

Psychosocial History

An individual’s past experiences and personal history regarding social interactions and psychologically significant events, often reviewed in therapeutic settings to better understand current issues.

Emotional Experiencing

The process of becoming fully aware of and expressing one's emotions as a therapeutic practice.