Final answer:
The beta of a portfolio equally invested in stock F with a beta of 1.08, stock G with a beta of 1.45, and the market is calculated as the average of the three, resulting in a beta of 1.18.
Step-by-step explanation:
The student is asking about the calculation of the beta for their investment portfolio, which is a measure of the investment's volatility compared to the market. Given that the portfolio is equally invested in stock F with a beta of 1.08, stock G with a beta of 1.45, and the market with a beta of 1 (as the market beta is always 1), we calculate the portfolio's beta by averaging the betas of the individual investments because the investments are equally weighted.
The formula to calculate the portfolio beta is:
Portfolio Beta = (Beta of F + Beta of G + Beta of Market) / Number of Investments
In this case:
Portfolio Beta = (1.08 + 1.45 + 1.00) / 3 = 1.18
Thus, the correct answer is c. 1.18, which indicates that the portfolio is slightly more volatile than the market.