You Hold a Diversified Portfolio Consisting of a R5,000 Investment $\beta$

question 6

Multiple Choice

You hold a diversified portfolio consisting of a R5,000 investment in each of 20 different ordinary shares.The portfolio beta is equal to 1.15.You have decided to sell one of your shares, a lead mining share whose ( $\beta$ ) . = 1.0, for R5,000 net and to use the proceeds to buy R5,000 of shares in a steel company whose ( $\beta$ ) . = 2.0.What will be the new beta of the portfolio?

• A) 1.12
• B) 1.20
• C) 1.22
• D) 1.10
• E) 1.15

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Definitions:

Debt Collector

A person or company tasked with collecting money owed on past due accounts from debtors.

Original Terms

The initial conditions and stipulations as set forth in an agreement or contract, before any amendments or modifications.

Creditor Beneficiary

A third party that benefits from a contract, particularly in contexts where the promisee's intention is to pay a debt to the beneficiary.

Promisor Directly

Pertains to the person who has made a promise or commitment being the one to fulfill that obligation without intermediaries.