An individual has $25,000 invested in a stock with a beta of 0.7 and another $40,000...

Question

Question

An individual has $25,000 invested in a stock with a beta of 0.7 and another $40,000 invested in a stock with a beta of 2.2.

Answer 1

Answer #1

Total investment=(25000+40,000)=$65,000

Portfolio beta=Respective beta*Respective investment weight

=(25,000/65,000*0.7)+(40,000/65,000*2.2)

=1.62(Approx).

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Answer 2

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