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Suppose that you have a portfolio worth $100,000 which contains only two stocks. If one stock...

Suppose that you have a portfolio worth $100,000 which contains only two stocks. If one stock is valued at $65,000 and has a beta of .70 while the other stock has a beta of 1.2, what is the portfolio beta?

0.865

0.980

0.875

0.765

0.838

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Answer #1

Portfolio Beta will be weighted average beta of two stocks.

Portfolio Beta = weight of stock A * beta of stock A + weight of stock B * beta of stock B

= .65 * .7 + .35 * 1.2

= .875

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