Solved: What will be the new beta of the portfolio, Finance Basics

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What will be the new beta of the portfolio

Question:

You hold a diversified portfolio consisting of a $5,000 investment in each of 20 different common stocks. The portfolio beta is equal to 1.15. You have decided to sell one of your stocks, a lead mining stock whose b is equal to 1.0, for $5,000 net and to use the proceeds to buy $5,000 of stock in a steel company whose b is equal to 2.0. What will be the new beta of the portfolio?

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Finance Basics: What will be the new beta of the portfolio

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