Question
Assume that you have an investment portfolio of $200,000. The investment consists of $100,000 in Amazon and $100,000 in Apple. You are thinking of rebalancing
Assume that you have an investment portfolio of $200,000. The investment consists of $100,000 in Amazon and $100,000 in Apple. You are thinking of rebalancing the portfolio by selling $30,000 worth of Alphabet and $30,000 worth of Apple. You plan to invest the realized proceeds of $60,000 in Facebook stock. Assume that betas of Amazon (1.63), Apple (0.99), and Facebook (1.18). A. What would be the beta of your new portfolio? B. Say you decide to sell off all the three stocks and invest 50% in treasury bonds and the remaining 50% in S&P 500 Index fund. What would be the new beta of your portfolio?
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