Portfolio Beta Your investment club has only two stocks in its portfolio. $20,000 is invested in...
Portfolio Beta
Your investment club has only two stocks in its portfolio. $20,000 is invested in a stock with a beta of 0.7, and $35,000 is invested in a stock with a beta of 1.6. What is the portfolio's beta? Round your answer to two decimal places.
Homework Answers
| CALCULATION OF THE EXPECTED BETA OF PORTFOLIO | ||||
| Investment amount | Weight (A) | Beta (B) | Portfolio Beta (C = X B) | |
| Investment in Stock 1 | $ 20,000 | 36% | 0.70 | 0.25 |
| Investment in Stock 2 | $ 35,000 | 64% | 1.60 | 1.02 |
| $ 55,000 | 100% | 1.27 | ||
| Answer = Expected portfolio Beta = 1.27 | ||||
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