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What Should Be the Beta of a Replacement Stock If

question 76

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What should be the Beta of a replacement stock if an investor wishes to achieve a portfolio Beta of 1.0 by replacing Stock C in the following equally weighted portfolio: Stock A = .9 Beta; Stock B = 1.1 Beta; Stock C = 1.35 Beta?


Definitions:

James-Lange Theory

A hypothesis proposing that emotions are the outcome of physical responses to occurrences.

Placebos

Inert substances or treatments given to a participant in an experiment, lacking any specific pharmacological effect, used as a control to test the effectiveness of drugs.

Epinephrine Injections

Medical treatments involving the administration of epinephrine, a hormone and medication, to address severe allergic reactions, among other uses.

Schachter And Singer

Known for their two-factor theory of emotion, suggesting that emotions are the result of physiological arousal and the cognitive labeling of that arousal.

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