You have an $8 million portfolio consisting of a $400,000 investment in each of 20 different stocks.

Question:

You have an $8 million consisting of a $400,000 investment in each of 20 different stocks. The has a beta equal to 1.1. You are considering selling $400,000 worth of one stock that has a beta equal to 0.9 and using the proceeds to purchase another stock that has a beta equal to 1.9. What will be the new beta of your following this transaction?
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...