To calculate the portfolio's beta, we need to take into account the proportion of the total investment that each stock represents and their respective betas.

1. First, calculate the total investment, which is $20,000 + $75,000 = $95,000.

2. Next, calculate the proportion of the total investment that each stock represents. For the first stock, this is $20,000 / $95,000 = 0.2105 (approximately). For the second stock, this is $75,000 / $95,000 = 0.7895 (approximately).

3. Then, multiply each stock's beta by the proportion of the total investment that it represents. For the first stock, this is 0.6 * 0.2105 = 0.1263. For the second stock, this is 2.5 * 0.7895 = 1.97375.

4. Finally, add these two numbers together to find the portfolio's beta. So, 0.1263 + 1.97375 = 2.1 (approximately).

So, the portfolio's beta is approximately 2.1.

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To calculate the portfolio's beta, we need to take into account the proportion of the total investment that each stock represents and their respective betas.

1. First, calculate the total investment, which is $20,000 + $75,000 = $95,000.

2. Next, calculate the proportion of the total investment that each stock represents. For the first stock, this is $20,000 / $95,000 = 0.2105 (approximately). For the second stock, this is $75,000 / $95,000 = 0.7895 (approximately).

3. Then, multiply each stock's beta by the proportion of the total investment that it represents. For the first stock, this is 0.6 * 0.2105 = 0.1263. For the second stock, this is 2.5 * 0.7895 = 1.97375.

4. Finally, add these two numbers together to find the portfolio's beta. So, 0.1263 + 1.97375 = 2.1 (approximately).

So, the portfolio's beta is approximately 2.1.

Knowee AI · Accepted Answer

To calculate the portfolio's beta, we need to take into account the proportion of the total investment that each stock represents and their respective betas.

1. First, calculate the total investment, which is $20,000 + $75,000 = $95,000.

2. Next, calculate the proportion of the total investment that each stock represents. For the first stock, this is $20,000 / $95,000 = 0.2105 (approximately). For the second stock, this is $75,000 / $95,000 = 0.7895 (approximately).

3. Then, multiply each stock's beta by the proportion of the total investment that it represents. For the first stock, this is 0.6 * 0.2105 = 0.1263. For the second stock, this is 2.5 * 0.7895 = 1.97375.

4. Finally, add these two numbers together to find the portfolio's beta. So, 0.1263 + 1.97375 = 2.1 (approximately).

So, the portfolio's beta is approximately 2.1.

PORTFOLIO BETA An individual has $20,000 invested in a stock with a beta of 0.6 and another $75,000 invested in a stock with a beta of 2.5. If these are the only two investments in her portfolio, what is her portfolio’s beta?

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