Tom O'Brien has a 2-stock portfolio with a total value of $100,000.$37,500 is invested in Stock A with a beta of 0.75 and the remainder is invested in Stock B with a beta of 1.42.What is his portfolio's beta?
A)1.17
B)1.23
C)1.29
D)1.35
E)1.42

Question

Quizplus · Accepted Answer

The portfolio's beta is a weighted average of the individual stock betas, with the weights being the proportions of the portfolio invested in each stock. In this case, the portfolio's beta is:(0.75 * 0.375) + (1.42 * 0.625) = 1.17

Tom O'Brien Has a 2-Stock Portfolio with a Total Value