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

question 27

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

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Definitions:

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Pertaining to a contract, a term describing obligations that have not yet been performed by one or more parties.

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