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Marta_Voda [28]
3 years ago
13

Donald Gilmore has $100,000 invested in a 2-stock portfolio. $35,000 is invested in Stock X and the remainder is invested in Sto

ck Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta
Business
1 answer:
netineya [11]3 years ago
6 0

Answer:

Beta of Portfolio is 0.98

Explanation:

<u>Given</u>:  Investment in security X = $35,000

            Investment in security Y = $65,000

            Beta of X = 1.5

            Beta of Y = 0.70

Beta is a measure of degree of responsiveness of a security return with respect to market return.

The portfolio beta is the weighted average beta of individual stock beta's in a portfolio.

Beta of portfolio = Beta of Stock X × Weightage of money invested in X + Beta of Y × Weightage of money invested in Y

Beta of Portfolio = 1.50 × \frac{35,000}{100000} + 0.7 × \frac{65000}{100000}

Beta of Portfolio = 0.525 + 0.455 = 0.98

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describe the difference between autonomous expenditure and induced expenditure. Which sectors of the economy are assumed to have
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Answer:

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