What Should Be the Beta of a Replacement Stock If

question 76

Multiple Choice

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?

• A) 0.93 Beta
• B) 1.00 Beta
• C) 1.08 Beta
• D) 1.15 Beta

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Definitions:

Morality

Principles concerning the distinction between right and wrong or good and bad behavior; a system of values and ethics that guide individual or group actions.

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Psychological Theme

An underlying subject or pervasive pattern that influences an individual's thoughts, emotions, and behaviors, often shaping their worldview and interactions.

Self-Control

The capacity to manage one's feelings, thoughts, and actions when confronted with desires and sudden urges.