Question

In a given portfolio, replacing an existing investment with a lower beta investment results in _____.​

a. ​a decrease in the required rate of return of the portfolio

b. ​an increase in the expected rate of rate return of the portfolio

c. ​an increase in the systematic risk of the portfolio

d. ​a decrease in the actual rate of return of the portfolio

e. ​the portfolio beta moving toward 1.0

Answer 1

Lower beta investments are less risky therefore they require a smaller rate of return. The answer here is A.

Answer 2

Your answer is A . ​a decrease in the required rate of return of the portfolio

Step-by-step explanation: