SOLUTION: suppose you hold a deiversified portfolio consisting of a $7500 investment in each of 20 different common stock.The portfolio beta is equal to 1.12.Now,supose you have decided to s

Question 1107727: suppose you hold a deiversified portfolio consisting of a $7500 investment in each of 20 different common stock.The portfolio beta is equal to 1.12.Now,supose you have decided to sell one of the stocks in your portfolio with a beta equal to 1.0 for $7500 and to use these proceeds to buy another stock for your portfoilo.Assume the new stocks beta is equal to 1.75.calculate your portfolio is new beta
Answer by addingup(3677) (Show Source): You can put this solution on YOUR website!
20(1.12) = 22.4
22.4 - 1 = 21.4
21.4 + 1.75 = 23.15
23.15/20 = 1.1575 or 1.6
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