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

question 126

Multiple Choice

Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20. You are in the process of buying 1,000 shares of Omega Corp at $10 a share and adding it to your portfolio. Omega has an expected return of 13.0% and a beta of 1.50. The total value of your current portfolio is $90,000. What will the expected return and beta on the portfolio be after the purchase of the Omega stock?

• A) 10.64%; 1.17
• B) 11.20%; 1.23
• C) 11.76%; 1.29
• D) 12.35%; 1.36
• E) 12.97%; 1.42

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Definitions:

Circadian

Relating to biological processes that occur in a natural, cyclic pattern of approximately 24 hours.

Circannual Rhythms

Biological processes and behaviors that display an annual, or yearly, cycle.

Constant Darkness

An environmental condition characterized by the absence of light for an extended period, affecting biological rhythms and behaviors in organisms.

Hibernation

A state of inactivity and metabolic depression in animals during winter to conserve energy, often involving significantly lowered body temperature and slowed breathing.