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8 June, 19:04

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

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  1. 8 June, 22:24
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    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
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