An individual has $10,000 invested in a stock with a beta of 0.4 and another $55,000...

An individual has $10,000 invested in a stock with a beta of 0.4 and another $55,000 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? Round your answer to two decimal places.

Expert Solution

Notes: We calculate portfolio beta by calculating weight of each investment in the portfolio and then beta is multiplied with beta of each investment to get portfolio beta.

Solution:
	Portfolio's beta 2.18

Working Notes:

	Beta of a Portfolio = Weighted average risk of individual assets.

	B1 = 0.40
	W1 = investment 1 / total investment
	= 10,000/(10,000 + 55,000) = 10,000/65,000
	= (10/65)

	B2 = 2.50
	W2 = investment 2/ total investment
	= 55,000/(10,000 + 55,000) = 55,000/65,000
	= (55/65)

	Beta of a Portfolio = Weighted average risk of individual assets.
	= B1 x W1 + B2 x W2
	= 0.40 x (10/65) + 2.5 x (55/65)
	= 2.176923077
	=2.18

Please feel free to ask if anything about above solution in comment section of the question.

jeff jeffy answered 5 months ago

An individual has $25,000 invested in a stock with a beta of 0.3 and another $40,000...

An individual has $25,000 invested in a stock with a beta of 0.3 and another $40,000 invested in a stock with a beta of 1.4. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.

An individual has $50,000 invested in a stock with a beta of 0.8 and another $75,000...

An individual has $50,000 invested in a stock with a beta of 0.8 and another $75,000 invested in a stock with a beta of 2.1. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.

An individual has $50,000 invested in a stock with a beta of 0.3 and another $40,000...

An individual has $50,000 invested in a stock with a beta of 0.3 and another $40,000 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? Round your answer to two decimal places.

An individual has $25,000 invested in a stock with a beta of 0.5 and another $60,000...

An individual has $25,000 invested in a stock with a beta of 0.5 and another $60,000 invested in a stock with a beta of 2.1. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.

1. An individual has $30,000 invested in a stock with a beta of0.3 and another...

1. An individual has $30,000 invested in a stock with a beta of 0.3 and another $50,000 invested in a stock with a beta of 2.3. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.____2. Assume that the risk-free rate is 5.5% and the required return on the market is 10%. What is the required rate of return on a stock with...

An individual has $15,000 invested in a stock with a beta of 0.5 and another $60,000...

An individual has $15,000 invested in a stock with a beta of 0.5 and another $60,000 invested in a stock with a beta of 1.3. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.

1.An individual has $15,000 invested in a stock with a beta of 0.5 and another $50,000...

1.An individual has $15,000 invested in a stock with a beta of 0.5 and another $50,000 invested in a stock with a beta of 1.6. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places. 2.Assume that the risk-free rate is 7.5% and the required return on the market is 9%. What is the required rate of return on a stock with a...

PORTFOLIO BETA An individual has $45,000 invested in a stock with a beta of 0.8 and...

PORTFOLIO BETA An individual has $45,000 invested in a stock with a beta of 0.8 and another $30,000 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? Round your answer to two decimal places.

Anindividual has $25,000 invested in a stock with a beta of 0.5 andanother $65,000...

An individual has $25,000 invested in a stock with a beta of 0.5 and another $65,000 invested in a stock with a beta of 1.2. If these are the only two investments in her portfolio, what is her portfolio's beta? Do not round intermediate calculations. Round your answer to two decimal places.Assume that the risk-free rate is 3.5% and the required return on the market is 13%. What is the required rate of return on a stock with a beta...

Gretta's portfolio consists of $700,000 invested in a stock that has a beta of 1.5 and...

Gretta's portfolio consists of $700,000 invested in a stock that has a beta of 1.5 and $300,000 invested in a stock that has a beta of 0.8. The risk-free rate is 6% and the market risk premium is 5%. Which of the following statements is CORRECT? Answers: a. The portfolio's required return is less than 11%. b. If the risk-free rate remains unchanged but the market risk premium increases by 2%, Gretta's portfolio's required return will increase by more than...

Question