What Should Be the Beta of a Replacement Stock If

question 86

Multiple Choice

What should be the beta of a replacement stock if an investor wishes to achieve a portfolio beta of 1.2 by replacing stock C in the following equally weighted portfolio: stock A = 0.9 beta; stock B = 1.1 beta; stock C = 1.35 beta?

• A) 0.7
• B) 1.6
• C) 1.2
• D)1.8

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Definitions:

Liberal Democrats

Liberal Democrats are members of a political ideology or party that emphasizes individual rights, civil liberties, democracy, and typically advocates for progressive policies on social, economic, and environmental issues.

Republicans

A member or supporter of the Republican Party, one of the two major political parties in the United States, traditionally emphasizing limited government, individual freedoms, and free-market policies.

New Deal Democrats

A reference to the followers and supporters of Franklin D. Roosevelt's New Deal programs in the 1930s, advocating for government intervention in the economy to address the Great Depression.

Conservative Democrats

A faction within the Democratic Party in the United States that tends to hold more traditional or conservative views compared to the broader party, especially on social and economic issues.