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gizmo_the_mogwai [7]
3 years ago
9

An investment banker has recommended aâ $100,000 portfolio containing assetsâ B, D, and F.â $20,000 will be invested in assetâ B

, with a beta ofâ 1.5; $50,000 will be invested in assetâ D, with a beta ofâ 2.0; andâ $30,000 will be invested in assetâ F, with a beta of 0.5. The beta of the portfolio isâ
Business
1 answer:
soldier1979 [14.2K]3 years ago
8 0

Answer:

β = 1.45

Explanation:

The beta of the portfolio is defined as an average of the betas (β) of each asset within the portfolio weighted by their respective invested amounts (A):

A_{P}* \beta_{P} =A_{B}* \beta_{B} +A_{D}* \beta_{D} +A_{F}* \beta_{F} \\\beta_{P} =\frac{20,000 * 1.5 + 50,000*2.0 +30,000*0.5}{100,000}\\\beta_{P} = 1.45

The beta of the portfolio is 1.45

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