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:

MMPI-2

The Minnesota Multiphasic Personality Inventory-2, a widely used standardized test for assessing personality traits and psychopathology.

MBTI

Myers-Briggs Type Indicator, a personality inventory based on Jungian psychological types, used to understand individual differences.

TAT

A projective psychological test (Thematic Apperception Test) that asks respondents to tell stories about ambiguous pictures.

CPI

Consumer Price Index, a measure assessing the average change over time in the prices paid by consumers for a basket of goods and services.