Assume That You Hold a Well-Diversified Portfolio That Has an Expected

question 31

Multiple Choice

Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20.You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio.Alpha has an expected return of 22.5% and a beta of 1.20.The total value of your current portfolio is $90,000.What will the expected return and beta on the portfolio be after the purchase of the Alpha stock? Do not round your intermediate calculations.

• A) 11.42%;1.04
• B) 11.54%;1.26
• C) 15.07%;1.33
• D) 12.15%;1.20
• E) 13.97%;0.97

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Definitions:

Hospital Expenses

Costs associated with receiving medical care in a hospital, which may include fees for room stays, medical procedures, medications, and the use of hospital equipment.

Gatekeeper

One who regulates access to someone or something; in insurance, a primary care physician who coordinates the patient’s referral to specialists and hospital admissions.

Primary Care Physician

A Primary Care Physician (PCP) is a healthcare provider who offers general medical treatment and who is typically the first point of consultation for patients.

HMO

Health Maintenance Organization; a type of health insurance plan that typically requires members to receive healthcare services from a network of designated providers.