What is your portfolio beta if 50% of your money is invested in the market portfolio and the remainder is invested in a risk-free asset?
A) 0.25
B) 0.75
C) 1.00
D) 0.50

Question

Quizplus · Accepted Answer

The portfolio beta is equal to the weight of the market portfolio multiplied by its beta plus the weight of the risk-free asset multiplied by its beta, which is zero. Therefore, the portfolio beta is 0.5 times the beta of the market portfolio, or 0.5 x 1.0 = 0.50.

What Is Your Portfolio Beta If 50% of Your Money