(solution) Please refer to the attachment to answer this question. This

(solution) Please refer to the attachment to answer this question. This

Please refer to the attachment to answer this question. This question was created from Unit Exam 2 – BAM 313 – Financial Management https://www.coursehero.com/file/6685653/Unit-Exam-2-BAM-313-Financial-Management/ The following text was automatically generated from the attachment: 11) Which of the following statements is most correct concerning diversification and risk? a. Risk-averse investors often select portfolios that include only companies from the same industry group because the familiarity reduces the risk. b. Risk?averse investors often choose companies from different industries for their port- folios because the correlation of returns is less than if all the companies came from the same industry. 0. Only wealthy investors can diversify their portfolios because a portfolio must contain at feast 50 stocks to gain the benefits of diversification. d. Proper diversification generally results in the elimination of risk. 12) An investor currently holds the following portfolio: Amount Invested 5,000 shares of Stock A $10,000 Beta = 1.8 10,000 shares of Stock B $30,000 Beta = 1.5 20,000 shares of Stock C $20,000 Beta 2 1.2 The investor is worried that the beta of his portfolio is too high, so he wants to sell some stock A and add stock 0, which has a beta of 0.70, to his portfolio. if the investor wants his portfolio to have a beta of 1.30, how much stock A must he replace with stock 0? a. $8,182 b. $7,230 c. $6,875 d. $9.309