You are creating a portfolio from the following companies: MSFT à β = 1.03 PG à...
- You are creating a portfolio from the following companies:
- MSFT à β = 1.03
- PG à β = 0.71
- NFLX à β = 1.71
You will invest 35% into PG, 30% in NFLX, and 35% in MSFT. Considering this information, which of the following statements is accurate?
portfolio beta is greater than that of the market beta
portfolio beta is smaller than the beta of the risk-free asset
portfolio beta is equal to that of the market beta
portfolio beta is larger than two of the individual asset betas
Homework Answers
Portfolio beta=(weight of PG*Beta of PG)+(weight of NFLX*Beta of NFLX)+(Weight of MSFT*Beta of MSFT)
=(35%*0.71)+(30%*1.71)+(35%*1.03)
=1.12
Market beta always will be 1.0
Here the portfolio beta is greater than the market beta.
Option A is correct
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