2. You want to form a portfolio of stock A and stock B. Stock A has a beta of. 85 and stock B has a beta of 1.6. If you invest $6,000 in stock A and $4,000 in stock B, what is the portfolio beta

Given: Investment in Stock A = $6000 and in Stock B = $4000

Particulars weights beta

Stock A 60 percent 0.85

Stock B 40 percent 1.6

The following is the calculation of the portfolio beta

Portfolio Beta = (0.6 multiply with 0.85) + (0.4 multiply with 1.6)

Solving the equation:

= 0.51 + 0.64

Thus, after solving we get, 1.15

Thus, the portfolio beta = 1.15