You Have a Portfolio of 10 Stocks That Are Held

question 7

Multiple Choice

You have a portfolio of 10 stocks that are held in equal amounts. The current beta of this portfolio is 1.55 and the beta of Stock A is 2. If Stock A is sold, what does the beta of the replacement stock have to be to ensure a new portfolio beta of 1.46?

• A) 1.10
• B) 1.37
• C) 1.27
• D) 1.00
• E) Undermined

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