A portfolio consists of two stocks and has a beta of 1.25.The first stock has a beta of 1.02 and comprises 30 percent of the portfolio.What is the beta of the second stock?
A) 0.41
B) 0.66
C) 0.82
D) 1.28
E) 1.35

Name: A portfolio consists of two stocks and has a beta of 1.25.The first stock has a beta of 1.02 and comprises 30 percent of the portfolio.What is the beta of the second stock? A) 0.41 B) 0.66 C) 0.82 D) 1.28 E) 1.35
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Question

Quizplus · Accepted Answer

1.25 = (0.30 × 1.02) + [(1 − 0.30) × β_B]; β_B = 1.35

A Portfolio Consists of Two Stocks and Has a Beta