A Portfolio of Three Stocks with Total Market Value of $1,000,000

question 83

Essay

A portfolio of three stocks with total market value of $1,000,000 currently has a Beta of 1.4.In light of an expected market downturn, you wish to reduce the portfolio Beta to no more than 1.0.Two stocks are likely candidates for sale, one with a Beta of 1.8 and a market value of $200,000 and the other with a Beta of 1.5 and a market value of $250,000.Assuming that you could find one appropriate stock to replace these two, what should be its Beta?

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Definitions:

Sick Role

The concept describing the social expectations of an individual who is ill, including seeking treatment and striving towards recovery.

Health-Related Decisions

Choices made by individuals or healthcare professionals that impact one's physical or mental health.

Cancer Treatment

Medical procedures and therapies used to combat cancer, including surgery, chemotherapy, radiation therapy, and targeted drug therapy.

Sick Role

A concept in sociology that describes the expectations of an individual who is ill and the societal expectations for how others should react to the individual.