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ivolga24 [154]
3 years ago
14

Bill Dukes has $100,000 invested in a 2 stock portfolio; $75,000 is invested in Stock X and the remainder is invested in Stock Y

. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta?
A. 1.30
B. 1.00
C. 0.98
D. 1.39
E. 1.44
Business
1 answer:
Marta_Voda [28]3 years ago
3 0

Answer:

A. 1.30

Explanation:

In order to find portfolio beta we will multiply each individual stock's beta with its weight in the portfolio. Stock X has a weight of 75%(75,000/100,000) and a Beta of 1.5. Stock Y has a weight of 25%(25,000/100,000) and a Beta of 0.7.

Portfolio Beta = (1.5*0.75)+(0.70*0.25)=1.3

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