Question

An individual has $ 30,000 invested in a stock with a beta of 0.6 and another $30,000 invested in a stock with a beta of 1.2. if these are the only two investments in her portfolio, what is her portfolio’s beta?

Answer 1

Portfolio beta = 0.9

Step-by-step explanation:

The portfolio beta is the weighted average of the two beta using tge amount invested as the weight.

Total amount invested = 30,000 + 30,000 = 60,000

Portfolio beta =

=(30,000/60,000)× 0.6 + (30,000/600000)× 1.2

Portfolio beta= 0.9