Question

You decide to invest $20,500 in Bank of America and $14,500 in Twitter. What is the portfolio’s beta? Bank of America beta: 1.27 Twitter beta: 1.96

Answer 1

Bp= 1.56

Step-by-step explanation:

Giving the following information:

You decide to invest $20,500 in Bank of America and $14,500 in Twitter.

Bank of America beta: 1.27 Twitter beta: 1.96

We need to use the following formula:

Bp= Wa*Ba + Wb*Bb

W= weighted average invest

B= beta

Bp= (20,500/35,000)*1.27 + (14,500/35,000)*1.96= 1.56