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Economics, Public Finance
Year 4
Managerial Finance: Calculating the expected return and beta of a portfolio after buying a new stock.
You have a portfolio with a total value of $9,000 which has an expected return of 12% with a beta of 1.2. You plan to buy $1,000 of a stock with an expected return of 20% and a beta of 2.0. What will be the expected return and beta of the portfolio after purchasing the new stock?
a) 12.0%, 1.2
b) 12.8%, 1.28
c) 13.2%, 1.4
d) 14.0%, 1.32
By OTA: We Lin Kerk, MHRM
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