Paul McLaren Holds the Following Portfolio Paul Plans to Sell Stock a and Replace It with r

question 91

Multiple Choice

Paul McLaren holds the following portfolio: $$\begin{array} { c r r } \text { Stock } & \text { Investment } & \text { Beta } \\\hline \text { A } & \$ 150,000 & 1.40 \\\text { B } & 50,000 & 0.80 \\\text { C } & 100,000 & 1.00 \\\text { D } & 75,000 & 1.20 \\\text { Total } & \underline{\$ 375,000} &\end{array}$$ Paul plans to sell Stock A and replace it with Stock E,which has a beta of 0.75.By how much will the portfolio beta change?

• A)?0.190
• B)?0.211
• C)?0.234
• D)?0.260
• E)?0.286

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Definitions:

CPI

Consumer Price Index, a measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to assess inflation.

Base Year

A reference year against which economic growth or inflation is measured, often using indices in real GDP calculations or price levels.

Structural Unemployment

A form of unemployment caused by a mismatch between the skills that workers offer and the skills demanded by employers, often due to technological changes or shifts in the economy.

Computer-Operated Machines

Computer-Operated Machines are devices controlled by computers to perform various tasks, increasing efficiency and precision in manufacturing and other industries.