Question

Donald Gilmore has $100,000 invested in a 2-stock portfolio. $72,500 is invested in Stock X and the remainder is invested in Stock Y. X's beta is 1.50 and Y's beta is 0.70. What is the portfolio's beta? Select the correct answer.

Answer 1

Correct answer is 1.28

Step-by-step explanation:

Investment in Y=(100,000-72500)=$27500

Portfolio beta=Respective betas*Respective investment weights

=(72500/100,000*1.5)+(27500/100,000*0.70)

=1.28