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    Suppose you hold a diversified portfolio consisting of a $7

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    Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio's beta is 0.85. Now, suppose you sell one of the stocks with a beta of 1.0 for $7,500 and use the proceeds to buy another stock whose beta is 0.95. Calculate your portfolio's new beta.

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    Solution Summary

    This solution helps calculate beta.

    $2.19