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?

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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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. Naw 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 anather stock with a beta of 0.80. What would your portfolio's new beta be?
The new portfolia beta is
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. Naw 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 anather stock with a beta of 0.80. What would your portfolio's new beta be? The new portfolia beta is
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