Peter has 100000 invested in a 2stock portfolio 30000 is inv

Peter has $100,000 invested in a 2-stock portfolio. $30,000 is invested in Stock X            and the remainder is invested in Stock Y. X\'s beta is 1.30 and Y’s beta is
0.90.    What is the portfolio\'s beta?

1.020

1.135

1.160

1.080

1.060

Solution

Correct answer is option a.1.020

Calculation of Portfolio Beta

Portfolio Beta = [Weight of \'X\' * Beta of \'X\'] +[Weight of \'Y\' * Beta of \'Y\']

=[.3*1.3] + [.7*.9]

=.39+.63

=1.02