Suppose you held a diversifed portfolio consisting of a $7.500 investment in each of 20 different common stocks. The portfolio's beta is 1.25. Now suppose you decided o sell stocks in your portfalio with a beta of 1.0 for $7.500 and use the proceeds to buy another stock with a beta of 0.80. What would your portfolio's new beta be?
Suppose you held a diversifed portfolio consisting of a $7.500 investment in each of 20 different common stocks. The portfolio's beta is 1.25. Now suppose you decided o sell stocks in your portfalio with a beta of 1.0 for $7.500 and use the proceeds to buy another stock with a beta of 0.80. What would your portfolio's new beta be?
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
Section: Chapter Questions
Problem 1PS
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![Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.25. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 0.80. What would your portfolio's new beta be?
The new portfolio beta is [ ].
**Graph/Diagram Explanation**: There are no graphs or diagrams included in the image.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0612e210-5e44-4b86-9116-976604f2cca4%2F21be4b61-c2ce-44b1-b1a5-b8f886d1ff0f%2Frj9kkk_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose you held a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 1.25. Now suppose you decided to sell one of the stocks in your portfolio with a beta of 1.0 for $7,500 and use the proceeds to buy another stock with a beta of 0.80. What would your portfolio's new beta be?
The new portfolio beta is [ ].
**Graph/Diagram Explanation**: There are no graphs or diagrams included in the image.
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