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kati45 [8]
3 years ago
9

A portfolio comprises Coke​ (beta of 1.1​) and​ Wal-Mart (beta of 1​). The amount invested in Coke is​ $10,000 and in​ Wal-Mart

is​ $20,000. What is the beta of the​ portfolio?
Business
1 answer:
dimaraw [331]3 years ago
5 0

Answer:

Beta= 1.133

Explanation:

Giving the following information:

Coke:

beta= 1.1​

Investment= $10,000

Wal-Mart:

beta= 1

Investment= $20,000

<u>First, we need to calculate the proportion of investments:</u>

Coke= 10,000/30,000= 0.33

Wal-Mart= 20,000/30,000= 0.77

<u>Now, to calculate the beta of the portfolio, we need to use the following formula:</u>

Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B)

Beta= (0.33*1.1) + (0.77*1)

Beta= 1.133

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