Answer:βB =0.9147=beta of new investment
Explanation:
Total investment= $130,000 + $49,000= $179,000
Using
Portfolio beta(βp) = wA × βA + wB × βB
Where βp is the portfolio beta coefficient,
wA is the weight of the first investment,
βA is the beta coefficient of first investment;
wB is the weight of the second investment,
βB is the beta coefficient of second investment
but weight of investment is stock value/ total investment x 100
wA= 130,000/ 179,000X 100=72.63%
WB= 49,000/179,000 X100=27.374%
Portfolio beta(βp) = wA × βA + wB × βB
1.18=(72.63%*1.28)+(27.374% XβB )
1.18=0.9296+0.27374βB
βB i=(1.18-0.9298)/0.27374
βB =0.9147=beta of new investment
