Suppose Stan Holds a Portfolio Consisting of a $10,000 Investment

question 132

Multiple Choice

Suppose Stan holds a portfolio consisting of a $10,000 investment in each of 8 different common stocks.The portfolio's beta is 1.25.Now suppose Stan decided to sell one of his stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.35.What would the portfolio's new beta be?

• A) 1.17
• B) 1.23
• C) 1.29
• D) 1.36
• E) 1.43

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Definitions:

Imports

Goods and services that are produced abroad and sold domestically

Net Exports

The value of a country's total exports minus its total imports.

Exports

Goods or services sent from one country to another for sale or trade.

Quota

A trade limitation enforced by the government, restricting the quantity or financial value of products that can be exported or imported over a set timeframe.