Sherrie Hymes Holds a $200,000 Portfolio Consisting of the Following

Multiple Choice

Sherrie Hymes holds a $200,000 portfolio consisting of the following stocks.The portfolio's beta is 0.875. $$\begin{array} { c r r } \text { Stock } & \text { Investment } & \text { Beta } \\\hline \text { A } & \$ 50,000 & 0.50 \\\text { B } & 50,000 & 0.80 \\\text { C } & 50,000 & 1.00 \\\text { D } & 50,000 & 1.20 \\\text { Total } &\underline{ \$ 200,000} &\end{array}$$ If Sherrie replaces Stock A with another stock,E,which has a beta of 1.50,what will the portfolio's new beta be?

A) 1.07
B) 1.13
C) 1.18
D) 1.24
E) 1.30