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

question 91

Multiple Choice

Paul McLaren holds the following portfolio: $\begin{array}{crr}\text { Stock } & \text { Investment } &\text { Beta }\\\mathrm{A} & \$ 150,000&1.40 \\\mathrm{~B} & 50,000&0.80 \\\mathrm{C} & 100,000 &1.00\\\mathrm{D} & 75,000&1.20 \\\text { Total } & \$ 375,000\end{array}$
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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