An investor holds a diversified portfolio with a beta equal to 1.5, consisting of a P100 investment in each of 10 different common stocks. He sold one of your stocks that has a beta equal to 0.5 for P100. The whole proceeds were used to purchase another stock that has a beta equal to 1. Determine the beta of the new portfolio?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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An investor holds a diversified portfolio with a beta equal to 1.5, consisting of a P100 investment in
each of 10 different common stocks. He sold one of your stocks that has a beta equal to 0.5 for P100.
The whole proceeds were used to purchase another stock that has a beta equal to 1. Determine the
beta of the new portfolio?

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