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3. Janet is holding a three stock portfolio with following investment and beta Beta Investment Stock .8 $100,000 A $50,000 $50,000 1 B 1.2 C

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3. Janet is holding a three stock portfolio with following investment and beta Beta Investment Stock .8 $100,000 A $50,000 $50,000 1 B 1.2 C If she sells stock B and replace it with stock D which has a beta of .75, what will be the new portfolio beta? [Hint: Bp If the market's required rate of return is 8% and risk free rate is 2%, what is her expected rate of return? [Hint: CAPM) i. = EwiB

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