Dukes has $100,000 invested in a 2-stock portfolio.$35,000 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?
A)0.65
B)0.72
C)0.80
D)0.89
E)0.98

Question

Quizplus · Accepted Answer

The portfolio's beta is calculated as the weighted average of the individual betas. The weight of Stock X is $35,000/$100,000 = 0.35, and the weight of Stock Y is $65,000/$100,000 = 0.65. The portfolio beta = (0.35 * 1.50) + (0.65 * 0.70) = 0.525 + 0.455 = 0.98.

Dukes Has $100,000 Invested in a 2-Stock Portfolio