Multiple Choice
You hold a diversified portfolio consisting of $1,000 investment in each of 10 different stocks. The portfolio has a beta of 0.8. You have decided to sell one of your stocks that has a beta equal to 1.1 for $1,000. You will purchase $1,000 of a new stock with a beta of 2.5. After these two transactions (sell and buy) , what will be the beta of the new portfolio?
A) 1.1
B) 0.99
C) 0.87
D) 0.94
Correct Answer:
Verified
Correct Answer:
Verified
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