5 pt D Question 3 Bill has 100000 invested in a 2stock portf

5 pt D Question 3 Bill has $100,000 invested in a 2-stock portfolio. $25,000 is invested in Stock A which has a beta of 1.70, and the remaining $75,000 is invested in Stock B, which has a beta of 1.42. What is the portfolio\'s beta? Your answer should be between 0.70 and 1.80, rounded to 2 decimal places, with no special characters 5 pts D Question 4

Solution

The beta of a portfolio is the weighted average beta of the securities which constitute the porfolio.

Portfolio Beta = 1.49 (.43+1.07)

Stock	Market Value	Weight	Beta	Weight*Beta
A	25,000	0.25	1.7	0.43
B	75,000	0.75	1.42	1.07