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38. Tom Noel holds the following portfolio: Stock Investment Beta A $150,000 1.40 B $50,000 0.80 C $100,000 1.00 D $75,000 1.20 Total $375,000 Tom

38. Tom Noel holds the following portfolio:

Stock

Investment

Beta

A

$150,000

1.40

B

$50,000

0.80

C

$100,000

1.00

D

$75,000

1.20

Total

$375,000

Tom plans to sell Stock A and replace it with Stock E, which has a beta of 0.80. By how much will the portfolio beta change? Do not round your intermediate calculations.

a.

0.240

b.

0.194

c.

0.290

d.

0.271

e.

0.230

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