Terry recently invested equal amounts in five stocks to form an investment portfolio, which has a beta

Question:

Terry recently invested equal amounts in five stocks to form an investment portfolio, which has a beta equal to 1.2—that is, β_P = 1.2. Terry is considering selling the riskiest stock in the portfolio, which has a beta coefficient equal to 2.0, and replacing it with another stock. If Terry replaces the stock that has a equal to 2.0 with a stock that has a equal to 1.0, what will be the new beta of his investment portfolio? Assume that equal amounts are invested in each stock in the portfolio.

Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Beta Coefficient
Beta coefficient is a measure of sensitivity of a company's stock price to movement in the broad market index. It is an indicator of a stock's systematic risk which is the undiversifiable risk inherent in the whole financial system. Beta coefficient...