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    zacharie101 Posts: 27, Reputation: 1
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    Nov 25, 2012, 05:57 PM
    Help with my homework
    Your retirement fund consists of a $5,000 investment in each of 15 different common stocks. The portfolio beta is 1.20. Suppose you sell one of the stocks with a beta of .08 for $5,000 and use the proceeds to buy another stock whose beta is 1.6. What is the portfolio’s new beta?


    What you see below,is the answer to the question above my teacher gave . He didn't give details about how he found each step of the answers can you please help. I'm just looking for someone to explain the steps to me since I already have the answers. How did he get the 6.6700%?



    Total investment $75,000
    Each stock's weight 6.6700%
    Remove 1 stock beta of .8 5.3360%
    Portfolio beta 1.200
    Other 14 stocks 1.147
    Add 1 stock at 1.60 0.1067
    New portfolio beta 1.25

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