You are managing a portfolio of 10 stocks which are held in equal amounts.The current beta of the portfolio is 1.64,and the beta of Stock A is 2.0.If Stock A is sold,what would the beta of the replacement stock have to be to produce a new portfolio beta of 1.55?
A) 1.10
B) 1.00
C) 0.90
D) 0.75
E) 0.50

Question

Quizplus · Accepted Answer

The beta of the new stock would have to be 1.10 to produce a new portfolio beta of 1.55.

You Are Managing a Portfolio of 10 Stocks Which Are