Your retirement fund consists of a $5,000 investment in each of 15 different common stocks. The portfolio's beta is 1.20. Suppose you sell one of the stocks with a beta of 0.7 for $5,000 and use the proceeds to buy another stock whose beta is 1.8. Calculate your portfolio's new beta.
Your retirement fund consists of a $5,000 investment in each of 15 different common stocks. The portfolio's beta is 1.20. Suppose you sell one of the stocks with a beta of 0.7 for $5,000 and use the proceeds to buy another stock whose beta is 1.8. Calculate your portfolio's new beta.
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 9P
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Your retirement fund consists of a $5,000 investment in each of 15 different common stocks. The portfolio's beta is 1.20. Suppose you sell one of the stocks with a beta of 0.7 for $5,000 and use the proceeds to buy another stock whose beta is 1.8. Calculate your portfolio's new beta. Do not round intermediate calculations. Round your answer to two decimal places.
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