Suppose You Hold a Diversified Portfolio Consisting of a $10,000

question 124

Multiple Choice

Suppose you hold a diversified portfolio consisting of a $10,000 investment in each of 12 different common stocks. The portfolio's beta is 1.25. Now suppose you decided to sell one of your stocks that has a beta of 1.00 and use the proceeds to buy a replacement stock with a beta of 1.34. What would the portfolio's new beta be?

• A) 1.15
• B) 1.21
• C) 1.28
• D) 1.34

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Definitions:

Sequencer Position

A control process or step in a sequence where a particular operation or series of operations is to be executed.

Energized

The state of being powered or having electrical current flowing through, commonly referring to circuits, devices, or components.

Position Parameter

A numerical value or setting that determines the position or configuration of a device or system component.