You Hold a Diversified $100,000 Portfolio Consisting of 20 Stocks

question 7

Multiple Choice

You hold a diversified $100,000 portfolio consisting of 20 stocks with $5,000 invested in each.The portfolio's beta is 1.12.You plan to sell a stock with b = 0.90 and use the proceeds to buy a new stock with b = 1.80.What will the portfolio's new beta be?

• A)1.286
• B)1.255
• C)1.224
• D)1.194
• E)1.165

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