Table 8.2
You are going to invest $20,000 in a portfolio consisting of assets X, Y, and Z, as follows:
-The beta of the portfolio in Table 8.2, containing assets X, Y, and Z is ________.
A) 1.5
B) 2.4
C) 1.6
D) 2.0

Question

Table 8.2
You are going to invest $20,000 in a portfolio consisting of assets X, Y, and Z, as follows: 
-The beta of the portfolio in Table 8.2, containing assets X, Y, and Z is ________.
A) 1.5 
B) 2.4 
C) 1.6 
D) 2.0

Quizplus · Accepted Answer

To calculate the beta of the portfolio, we need to use the formula:
beta portfolio = (weight of asset X * beta of asset X) +
                (weight of asset Y * beta of asset Y) +
                (weight of asset Z * beta of asset Z)

Substituting the given data, we get:
beta portfolio = (0.4 * 1.5) + (0.5 * 1.8) + (0.1 * 1.2)
beta portfolio = 0.6 + 0.9 + 0.12
beta portfolio = 1.62

Therefore, the beta of the portfolio is 1.6, and the best choice is C.

Table 8.2 You Are Going to Invest $20,000 in a Portfolio Consisting