Your retirement fund consists of a $5,000 investment in each of 15 different common stocks. The portfolio's beta is 1.20. Suppose you sell one of the stocks with a beta of 0.8 for $5,000 and use the proceeds to buy another stock whose beta is 1.6. Calculate your portfolio's new beta.
Added by Adam R.
Step 1
First, we need to find the total value of the portfolio. Since there are 15 stocks and each stock has a $5,000 investment, the total value of the portfolio is 15 * $5,000 = $75,000. Show more…
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