Question

UESTION 7 You hold a portfolio consisting of a $5,000 investment in each of 20 different stocks. The portfolio beta is equal to 1.12. You have decided to sell a coal mining stock (b = 1.00) at $5,000 net and use the proceeds to buy a like amount of a mineral rights company stock (b = 2.00). What is the new beta of the portfolio?

Answer 1

New Beta = 1,17

Step-by-step explanation:

Portfolio # Beta NEW Beta

$ 5.000 1 1,00 2,00

$ 5.000 2 1,12 1,12

$ 5.000 3 1,12 1,12

$ 5.000 4 1,12 1,12

$ 5.000 5 1,12 1,12

$ 5.000 6 1,12 1,12

$ 5.000 7 1,12 1,12

$ 5.000 8 1,12 1,12

$ 5.000 9 1,12 1,12

$ 5.000 10 1,12 1,12

$ 5.000 11 1,12 1,12

$ 5.000 12 1,12 1,12

$ 5.000 13 1,12 1,12

$ 5.000 14 1,12 1,12

$ 5.000 15 1,12 1,12

$ 5.000 16 1,12 1,12

$ 5.000 17 1,12 1,12

$ 5.000 18 1,12 1,12

$ 5.000 19 1,12 1,12

$ 5.000 20 1,24 1,24

$ 100.000 1,12 1,17