Steve Brickson Currently Has an Investment Portfolio That Contains Four

question 51

Multiple Choice

Steve Brickson currently has an investment portfolio that contains four stocks with a total value equal to $80,000. The portfolio has a beta (β) equal to 1.4. To earn higher returns, Steve wants to invest an additional $20,000 in a stock that has β equal to 2.4. After Steve adds the new stock to his portfolio, what will the portfolio's beta be?

• A)1.6
• B)1.8
• C)1.9
• D)2.0
• E)2.1

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Definitions:

Sales Increase

A rise in the amount of goods or services sold, often measured as a percentage increase over a previous period.

Contribution Format

A method of income statement presentation that stresses the contribution margin, which is sales revenue minus variable costs.

Income Statement

A financial statement that shows a company’s revenues and expenses over a specific period, resulting in net profit or loss.

Net Operating Income

The total profit a company makes from its operations, excluding taxes and interest.