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:

Statistically Significant

A determination that the results of a study are unlikely to have occurred by chance alone, according to a predefined threshold for significance, often indicating a real effect or difference.

Theoretical Significance

The importance or relevance of a concept or finding within a theoretical framework or body of knowledge, often indicating implications for understanding and further research.

Researcher's Expectations

The beliefs or biases a scientist may hold regarding the outcome of an experiment, which can influence the interpretation of data.

Study Influence

The examination of how various factors impact or change behaviors, attitudes, or outcomes in research or practical contexts.