Multiple Choice
An investor who believes the economy is slowing down wishes to reduce the risk of her portfolio. She currently owns 12 securities, each with a market value of $3,000. The current beta of the portfolio is 1.21, and the beta of the riskiest security is 1.62. What will the portfolio beta be if the riskiest security is replaced with a security of equal market value but a beta of 0.80?
A) 1.14
B) 1.18
C) 1.05
D) 1.10
Correct Answer:
Verified
Correct Answer:
Verified
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