You have a $2 million portfolio consisting of a $100,000 investment in eachof 20 different stocks. The portfolio has a beta of 1.1. You are consideringselling $100,000 worth of one stock with a beta of 0.9 and using the proceedsto purchase another stock with a beta of 1.4. What will the portfolio’s newbeta be after these transactions?
You have a $2 million portfolio consisting of a $100,000 investment in eachof 20 different stocks. The portfolio has a beta of 1.1. You are consideringselling $100,000 worth of one stock with a beta of 0.9 and using the proceedsto purchase another stock with a beta of 1.4. What will the portfolio’s newbeta be after these transactions?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 15MC
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You have a $2 million portfolio consisting of a $100,000 investment in each
of 20 different stocks. The portfolio has a beta of 1.1. You are considering
selling $100,000 worth of one stock with a beta of 0.9 and using the proceeds
to purchase another stock with a beta of 1.4. What will the portfolio’s new
beta be after these transactions?
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