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Kisachek [45]
3 years ago
11

After learning the course, you divide your portfolio into three equal parts, with one part in Treasury bills, one part in a mark

et index, and one part in a mutual fund with beta of 1.36. What is the beta of your overall portfolio?
Business
1 answer:
snow_tiger [21]3 years ago
6 0

Answer:

the beta of the overall portfolio is 0.79

Explanation:

The computation of the beta of the overall portfolio is as follows;

= Beta of Treasury bills × weight of Treasury bills + beta of market index × weight of market index + beta of mutual fund × weight of mutual fund

= 0 × 1 ÷ 3 + 1 × 1 ÷ 3 + 1.36 × 1 ÷ 3

= 1 ÷ 3 + 1.36 ÷ 3

= 2.36 ÷ 3

= 0.79

Hence, the beta of the overall portfolio is 0.79

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