You hold a diversified portfolio consisting of many different common stocks with a total market value of $100,000. The portfolio beta is equal to 1.15. You have decided to sell one of your stocks, a lead mining stock whose beta is equal to 0.6 , for $10,000 net and to use the proceeds to buy $10,000 of stock in a steel company whose beta is equal to 2.0 . What will be the new beta of the portfolio? (Round to two digit decimal places, e.g., 1.15)
You hold a diversified portfolio consisting of many different common stocks with a total market value of $100,000. The portfolio beta is equal to 1.15. You have decided to sell one of your stocks, a lead mining stock whose beta is equal to 0.6 , for $10,000 net and to use the proceeds to buy $10,000 of stock in a steel company whose beta is equal to 2.0 . What will be the new beta of the portfolio? (Round to two digit decimal places, e.g., 1.15)
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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You hold a diversified portfolio consisting of many different common stocks with a total market value of $100,000. The portfolio beta is equal to 1.15. You have decided to sell one of your stocks, a lead mining stock whose beta is equal to 0.6 , for $10,000 net and to use the proceeds to buy $10,000 of stock in a steel company whose beta is equal to 2.0 . What will be the new beta of the portfolio? (Round to two digit decimal places, e.g., 1.15)
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