Question

An investor currently holds the following portfolio: 8,000 shares of Stock A, worth $15,000; Beta =...

An investor currently holds the following portfolio:

8,000 shares of Stock A, worth $15,000; Beta = 1.4

15,000 shares of Stock B, worth $47,000; Beta = 1.6

25,000 shares of Stock C, worth $96,000; Beta = 2

The investor is worried that the beta of his portfolio is too high, so he wants to sell some stock C and add stock D, which has a beta of 0.9, to his portfolio.

If the investor wants his portfolio to have a beta of 1.66, he must replace $________ stock C with stock D.

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