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Your portfolio contains Stocks X and Y with the following dollaramount of investments: Stock X...

Your portfolio contains Stocks X and Y with the following dollar amount of investments: Stock X Y Investment $5,000 $15,000 The portfolio has a beta of 1.2. If you add Stock Z into your portfolio with an investment of $10,000, what is the beta of your new portfolio if Stock Z has a beta equal to 3?

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Expert Solution

Portfolio Beta is weighted Avg beta of securities in that portfolio

Security Amount Weights Beta Wtd Beta
Old Portfolio $    20,000.00     0.6667 1.20      0.8000
Stock Z $    10,000.00     0.3333 3.00      1.0000
New Portfolio Beta      1.8000

jeff jeffy answered 2 years ago
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