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20 January, 01:51

Donald Gilmore has $100,000 invested in a 2-stock portfolio. $72,500 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer.

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  1. 20 January, 04:10
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    Correct answer is 1.28

    Explanation:

    Investment in Y = (100,000-72500) = $27500

    Portfolio beta=Respective betas*Respective investment weights

    = (72500/100,000*1.5) + (27500/100,000*0.70)

    =1.28
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