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2. Tom holds the following portfolio Stock Investment Stock Investment Beta A $150,000 1.4 B $50,000 0.8 C $100,000 1 D $75,000 1.2 Total $375,000
2. Tom holds the following portfolio Stock Investment
Stock | Investment | Beta |
A | $150,000 | 1.4 |
B | $50,000 | 0.8 |
C | $100,000 | 1 |
D | $75,000 | 1.2 |
Total | $375,000 |
Tom plans to sell Stock A and replace it with Stock E, which has a beta of 0.75. By how much will the portfolio beta change?
(Please show calculations)
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