What should be the Beta of a replacement stock if an investor wishes to achieve a portfolio Beta of 1.0 by replacing Stock C in the following equally weighted portfolio: Stock A = .9 Beta; Stock B = 1.1 Beta; Stock C = 1.35 Beta?
A)0.93 Beta
B)1.00 Beta
C)1.08 Beta
D)1.15 Beta New Portfolio Beta = (.333 x .9) + (.333 x 1.1) + (.333 x Beta C)
1)0 = .3 + .366 +.333 x Beta C
-)334 = .333 x Beta C

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The Answer of What should be the Beta of a replacement stock if an investor wishes to achieve a portfolio Beta of 1.0 by replacing Stock C in the following equally weighted portfolio: Stock A = .9 Beta; Stock B = 1.1 Beta; Stock C = 1.35 Beta?
A)0.93 Beta
B)1.00 Beta
C)1.08 Beta
D)1.15 Beta New Portfolio Beta = (.333 x .9) + (.333 x 1.1) + (.333 x Beta C)
1)0 = .3 + .366 +.333 x Beta C
-)334 = .333 x Beta C

What Should Be the Beta of a Replacement Stock If