Suppose You Hold a Portfolio Consisting of a $10,000 Investment

Multiple Choice

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 1.55.What would the portfolio's new beta be? Do not round your intermediate calculations.

A) 1.60
B) 1.32
C) 1.58
D) 1.61
E) 1.38