Question
An analyst is taking action to lower the market risk of the portfolio shown below. Which action would lead to a portfolio with the least
An analyst is taking action to lower the market risk of the portfolio shown below. Which action would lead to a portfolio with the least amount of market risk?
U.S. Treasury security: $20,000
Stock #1 with a Beta of 1.0 valued at $10,000
Stock #2 with a Beta of 2.5 valued at $10,000
Stock #3 with a Beta of 1.5 valued at $10,000
Group of answer choices
Sell Stock #3 and Stock #2 and reinvest the proceeds in Stock #1.
Sell Stock #2 and reinvest the proceeds in Treasury securities.
Sell Stock #1 and purchase more of Stock #2.
Sell the U.S. Treasury security and reinvest the proceeds in Stock #1.
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