In a Given Portfolio, Replacing an Existing Investment with a Lower

question 3

Multiple Choice

In a given portfolio, replacing an existing investment with a lower beta investment results in _____. 

• A)an increase in the expected rate of rate return of the portfolio
• B)a decrease in the actual rate of return of the portfolio
• C)a decrease in the required rate of return of the portfolio
• D)an increase in the systematic risk of the portfolio
• E)the portfolio beta moving toward 1.0