What is the portfolio beta if 75% of your money is invested in the market portfolio, and the remainder is invested in a risk-free asset?
A) 0.50
B) 0.25
C) 1.25
D) 1.00
E) 0.75

Question

Quizplus · Accepted Answer

The portfolio beta is calculated as the weighted average of the betas of the assets in the portfolio. The market portfolio has a beta of 1, and the risk-free asset has a beta of 0. Therefore, the portfolio beta is (0.75 * 1) + (0.25 * 0) = 0.75.

What Is the Portfolio Beta If 75% of Your Money