Option (e) is correct
Portfolio beta is the weighted average beta of the stocks in portfolio. Here portfolio has the same expected return as that of market, so portfolio beta will also have same beta as that of market. Market has a beta of 1. So, portfolio beta is 1.
The weights of the betas in the stocks are:
Risk free asset: 50% or 0.50
Stock A: 30% or 0.30
Stock B: 20% or 0.20
In the next step, we will use the formula of portfolio beta or weighted average beta to calculate the beta of stock B.
Portfolio beta = w1 * b1 + w2 * b2 + w3 * b3
where, w1 is weight of risk free asset, w2 is weight of stock A, w3 is weight of stock B and b1 is beta of risk free asset, b2 is beta of stock A and b3 is beta of stock B, Portfolio beta = 1.
Risk free asset has zero beta. i.e. b1 = 0.
Putting the values in the above formula, we get,
1 = (0.50 * 0) + (0.3 * 1.5) + (0.2 * b3)
1 = 0 + 0.45 + b2 * 0.2
1 - 0.45 = b2 * 0.2
0.55 = b2 * 0.2
b2 = 0.55 / 0.2
b2 = 2.75
So, beta of stock B is 2.75
show work (10. You own a portfolio with 50% invested in a risk-free asset, 30% in...
show work 10. You own a portfolio with 40% invested in a risk-free asset, 20% in stock A with a beta of 1.7 and 40% in stock B. Your portfolio has the same expected return as the market portfolio. What is the beta of stock B? (The risk-free rate is 5%). a. 0.43 b. 1.00 c. 1.65 d. 1.85 e. 2.75
You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.23 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Portfolio beta 1.73 %
You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? Multiple Choice 1.00 2.10 1.90 1.05 2.00
QUESTION 17 You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 126 and the total portfolio is equally as risky as the market. Required: What must the beta be for the other stock in your portfolio? (Round your answer to 2 decimal places (e.g. 32.16).) Beta: QUESTION 18 A stock has a beta of 4.80 percent 92, the expected return on the market is 10.3 percent, and the...
You own a portfolio equally invested in a risk-free asset and two stocks (If one of the stocks has a beta of 0.97 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? (Hint: Remember that the market has a Beta=1; also remember that equally invested means that each asset has the same weight- since there are 3 assets, each asset's weight is 1/3 or 0.3333). Enter...
QUESTION 17 You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 126 and the total portfolio is equally as risky as the market. Required: What must the beta be for the other stock in your portfolio? (Round your answer to 2 decimal places leg.32.16).) Beta: QUESTION 18 A stock has a beta of o92, the expected return on the market is 103 percent, and the risk-free rate is...
You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.61 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? Answer to two decimals. Thank you !!
You own a portfolio equally invested in a risk-free asset and two stocks. One of the stocks has a beta of 129 and the total portfolio is equally as risky as the market. What must the beta be for the other stock in your portfolio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Beta
Q1. (RWJ 11-11) You own a portfolio equally invested in a risk-free asset and two stocks. If one of the stocks has a beta of 1.61 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio?
Mrs Gomez has a portfolio with an expected return of 7%. The portfolio is evenly invested in a stock and a risk-free asset. The market has an expected return of 12% and the risk-free asset has an expected return of 4%. What is the beta of the stock? O a) 0.50 Ob) 0.75 OC) 1.00 O d) 1.25 e) 1.50