You currently own a portfolio valued at $56,000 that has a beta of 1.28.You have another $10,000 to invest and would like to invest it in a manner such that the portfolio beta decreases to 1.20.What does the beta of the new investment have to be?
A)0.75
B)0.79
C)0.86
D)0.92
E)1.15

Question

Quizplus · Accepted Answer

β_P = 1.20 = ($56,000/$66,000)(1.28) + ($10,000/$66,000)xx = 0.75

You Currently Own a Portfolio Valued at $56,000 That Has