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28 September, 11:07

You place half your wealth into tivo stock and the other half into intel bonds. tivo stock's beta = 1.2 and intel bonds' beta is 0.90. calculate the portfolio beta

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  1. 28 September, 11:13
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    Weight to wealth in the tivo stock = w1 = 0.5

    Weight to wealth in intel bonds = w2 = 0.5

    Tivo stock beta (beta1) = 1.2

    Intel bond beta (beta2) = 0.90

    Portfolio (beta) = w1beta1 + w2beta2 = 0.5 x 1.2 + 0.5 x 0.9

    The answer is 1.05
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