Paul McLaren Holds the Following Portfolio Paul Plans to Sell Stock a and Replace It with \\
B&50,000

Paul McLaren holds the following portfolio: $\begin{array}{lll}Stock&Investment&Beta\\A&\$ 150,000 & 1.40 \\B&50,000 & 0.80 \\C&100,000 & 1.00 \\D&75,000 & 1.20\\Total&\$ 375,000 \\\end{array}$
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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