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

question 32

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 1.35.What would the portfolio's new beta be?

• A)1.17
• B)1.23
• C)1.29
• D)1.36
• E)1.43

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Definitions:

Income-Transfer Payments

Transfers of money from the government to individuals without any expectation of work or goods and services in return, often aimed at redistributing wealth.

Government Purchases

Expenditures by government entities on goods and services for current use to directly satisfy individual or collective needs.

Military Hardware

Physical, tangible equipment and weapons used by armed forces, such as tanks, aircraft, and ships.