Tom Noel Holds the Following Portfolio Tom Plans to Sell Stock a and Replace It with r

Multiple Choice

Tom Noel holds the following portfolio: $$\begin{array} { l r r } \underline { \text { Stock }} & \underline { \text { Investment } } & \underline { \text { Beta } } \\ \text { A } & \$ 150,000 & 1.40 \\\text { B } & 50,000 & 0.80 \\\text { C } & 100,000 & 1.00 \\\text { D } &\underline { {75,000 }} & 1.20 \\\text { Total } & \underline { \$375,000 }\end{array}$$
Tom plans to sell Stock A and replace it with Stock E, which has a beta of 0.75. By how much will the portfolio beta change?

A) ?0.190
B) ?0.211
C) ?0.234
D) ?0.260
E) ?0.286