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You invest $600 in security A with a beta of 1.5 and $400 in security B with a beta of 0.90. The beta of this portfolio is _________.

Respuesta :

facundobuzzetti

Answer:

Beta= 1.26

Explanation:

First, we will calculate the proportion of the portfolio of each security:

Security A= 600/1,000= 0.6

Security B= 400/1,000= 0.4

Now, the beta of the portfolio:

Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B)

Beta= (0.6*1.5) + (0.4*0.9)

Beta= 1.26

Parrain

Based on the amount invested and the various betas, the beta of the portfolio is 1.26

The beta of the portfolio will be a weighted average of the amounts invested in each security.

First find the value of the portfolio:

= 600 + 400

= $1,000

Beta is:

= (600 / 1,000 x 1.5) + (400 / 1,000 x 0.90)

= 1.26

In conclusion, the beta of the portfolio is 1.26

Find out more on portfolio beta at https://brainly.com/question/15187092.

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