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10. Suppose you hold a portfolio consisting of a $10,000 investment in each of 8 different common stocks. The portfolio's beta is 1.25. Now suppose you decided to sell one of your stocks that has a beta of 1.00 and to use the proceeds to buy a replacement stock with a beta of 1.65. What would the portfolio's new beta be?
1.48
1.33
1.53
1.32
1.03

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Solution Summary

The solution explains how to calculate the new beta of the portfolio

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Portfolio beta is the weighted average beta of individual stocks with the weight being the proportion ...

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