Paul McLaren Holds the Following Portfolio Paul Plans to Sell Stock a and Replace It with r

Paul McLaren holds the following portfolio: $$\begin{array} { c r r } \text { Stock } & \text { Investment } & \text { Beta } \\\hline \text { A } & \$ 150,000 & 1.40 \\\text { B } & 50,000 & 0.80 \\\text { C } & 100,000 & 1.00 \\\text { D } & 75,000 & 1.20 \\\text { Total } & \underline{\$ 375,000} &\end{array}$$ Paul plans to sell Stock A and replace it with Stock E,which has a beta of 0.75.By how much will the portfolio beta change?

A) ?0.190
B) ?0.211
C) ?0.234
D) ?0.260
E) ?0.286

Correct Answer:

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