You have a portfolio that is invested 11 percent in Stock R, 56 percent in Stock S, and the remainder in Stock T. The beta of Stock R is .84, and the beta of Stock S is 1.39. The beta of your portfolio is 1.47. What is the beta of the Stock T? Multiple Choice 1.82 1.12 1.56 2.02 1.47
Ans 1.82
Let Beta of Stock T be X | |||
Stock | BETA | INVESTMENT | BETA*INVESTMENT |
R | 0.84 | 11% | 0.09 |
S | 1.39 | 56% | 0.78 |
T | X | 33% | 33%* X |
Total | 1.47 | ||
0.09 + 0.78 + 33%*X = 1.47 | |||
X = (1.47 - 0.09 - 0.78)/ 33% | |||
X = 1.82 | |||
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