Homework Answers
Adjustment to Portfolio beta = Weight * (change in beta)
= 1/8 * (1.55 - 1 )
= 0.125 * (0.55)
= 0.06875
Portfolio's new beta = 1.25 + 0.06875
Portfolio's new beta = 1.31875
or Portfolio's new beta = 1.32 (rounded to '2' decimals)
Option 'C' is correct
1.32
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