In: Finance
You invest $2000 in stock A and $2000 in stock B. The two stocks
have betas of 1.2 and 1.4. What is the beta of the portfolio?
A. .95
B. 1.01
C. 1.20
D. 1.30
E. 1.40
beta of the portfolio is weighted average beta of individual stock
here weight of each stock is 50% (as inveted same amount)
so beta of the portfolio is
= 1.2*50% + 1.4*50% = 1.3
option D is correct