Sherrie Hymes Holds a $200,000 Portfolio Consisting of the Following

question 15

Multiple Choice

Sherrie Hymes holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 0.875. $\begin{array}{lrl}\text { Total }&\text { Investment }&\text { Beta }\\\mathrm{A} & \$ 50,000 & 0.50 \\\mathrm{~B} & 50,000 & 0.80 \\\mathrm{C} & 50,000 & 1.00 \\\mathrm{D} & 50,000 & 1.20\\\text { Total }&\$200,000\end{array}$
If Sherrie replaces Stock A with another stock, E, which has a beta of 1.50, what will the portfolio's new beta be?

• A) 1.07
• B) 1.13
• C) 1.18
• D) 1.24
• E) 1.30

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Definitions:

Beneficiary

An individual or entity that receives benefits or is designated to receive benefits, such as from a will, trust, insurance policy, or other contract.

Estate Planning

The process of making advance arrangements for the disposal of an individual's estate, often to minimize taxes and legal complications.

Intestate

The condition of having died without a valid will, leading to the distribution of the deceased's estate according to state laws.

Probate

A rephrased definition: The court-supervised process of authenticating a deceased person’s will, settling their debts, and distributing their estate to the rightful heirs.