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Suppose You Hold a Diversified Portfolio Consisting of a $10,000

Question 124

Multiple Choice

Suppose you hold a diversified portfolio consisting of a $10,000 investment in each of 12 different common stocks. The portfolio's beta is 1.25. Now suppose you decided to sell one of your stocks that has a beta of 1.00 and use the proceeds to buy a replacement stock with a beta of 1.34. What would the portfolio's new beta be?


A) 1.15
B) 1.21
C) 1.28
D) 1.34

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