Assume that you hold a well-diversified portfolio that has an expected return of 11.0% and a beta of 1.20.You are in the process of buying 1,000 shares of Alpha Corp at $10 a share and adding it to your portfolio.Alpha has an expected return of 13.0% and a beta of 1.50.The total value of your current portfolio is $90,000.What will the expected return and beta on the portfolio be after the purchase of the Alpha stock?
A)10.64%; 1.17
B)11.20%; 1.23
C)11.76%; 1.29
D)12.35%; 1.36
E)12.97%; 1.42

Question

Quizplus · Accepted Answer

The expected return and beta of the new portfolio are calculated by taking the weighted average of the returns and betas of the existing portfolio and the new investment in Alpha Corp.

Assume That You Hold a Well-Diversified Portfolio That Has an Expected