You have a portfolio with a beta of 157 What will be the new

You have a portfolio with a beta of 1.57. What will be the new portfolio beta if you keep 89 percent of your money in the old portfolio and 11 percent in a stock with a beta of 0.32? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Solution

By doing simple average method,

%of portfolio(a) Beta(b) (a)×(b)

0.89 1.57 1.3973

O.32 0.11 0.0352

TOTAL   1.4325

Therefore, the new portfolio beta is 1.43