Okay, I've been looking at these problems so long that my head is starting to spin. Can someone please give me an idea as to how I approach and solve these two problem? Here we go... First Problem: Suppose you hold a diversified portfolio consisting of a $7,500 investment in each of 20 different common stocks. The portfolio beta is equal to 1.12. Now, suppose you have decided to sell one of the stocks in your portfolio with a beta equal to 1.0 for $7,500 and to use these proceeds to buy another stock for your portfolio. Assume the new stock's beta is equal to 1.75. Calculate your portfolio's new beta. Second Problem: The Kish Investment Fund, in which you plan to invest some money, has a total capital of $500 million invested in 5 stocks. StockA- Investment 160 million, beta 0.5 StockB- Investment 120 million, beta 2.0 StockC- Investment 80 million, beta 4.0 StockD- Investment 80 million, beta 1.0 StockE- Investment 60 million, beta 3.0 The beta coefficient for a fund like Kish Investment can be found as a weighted average of the fund's investments. The current risk-free rate is 6%, whereas market returns have the following estimated probability distribution for the next period. Probability 0.1 Market Return 7%, Probability 0.2 Market Return 9%, Probability 0.4 Market Return 11%, Probability 0.2 Market Return 13%, Probability 0.1 Market return 15%. Suppose Bridget Nelson, the president, receives a proposal for a new stock. The investment needed to take a position in the stock is $50 million, it will have an expected return of 15%, and its estimated beta coefficient is 2.0. Should the new stock be purchased? At what expected rate of return should the fund be indifferent to purchasing the stock? Thanks!