Question
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
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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Public Finance
Authors: Harvey S Rosen
7th Edition
0072876484, 978-0072876482
