Question

In: Finance

You are going to invest $18,000 equally in a portfolio consisting of Assets Z, D, and...

  1. You are going to invest $18,000 equally in a portfolio consisting of Assets Z, D, and W, as follows: Calculate the beta of the portfolio containing assets ZDW.

Asset:

Annual Return:

Probability:

Beta:

Z

10%

50%

1.20

D

8%

25%

1.60

W

16%

25%

2.00

  1. 1.60
  2. 2.40
  3. 2.00
  4. 1.50

Solutions

Expert Solution

Ans d. 1.50

Stock Probability (i) Beta (ii) Probability* Beta (i)* (ii)
Z 50.00%                     1.20                                      0.60
D 25.00%                     1.60                                      0.40
W 25.00%                     2.00                                      0.50
Total                                      1.50

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