Question
You have a diversified portfolio of $100,000 consisting of 20 stocks with $5,000 invested in each. The beta of the portfolio is 1.12. You plan
You have a diversified portfolio of $100,000 consisting of 20 stocks with $5,000 invested in each. The beta of the portfolio is 1.12. You plan to sell a stock with b = 0.90 and use the proceeds to buy a new share with b = 1.80. What will be the new beta of the portfolio?
Step by Step Solution
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Step: 1
To calculate the new beta of the portfolio we need to consider the current betaweighted contribution ...
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Principles of Finance
Authors: Scott Besley, Eugene F. Brigham
6th edition
9781305178045, 1285429648, 1305178041, 978-1285429649
