Multiple Choice
You own a portfolio with Stocks A and B. The betas of the stocks are 0.9 and 1.1, respectively. You sell a portion of your position in Stock A and short sell Stock C with a beta of 1.3.
A) The beta of the new portfolio will increase.
B) The beta of the new portfolio will decrease.
C) The beta of the new portfolio will remain the same.
D) The beta of the new portfolio will remain the same or increase.
E) The beta of the new portfolio will remain the same or decrease.
Correct Answer:
Verified
Correct Answer:
Verified
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