Portfolio beta
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2. You have a $1,000 portfolio which is invested in stocks A and B plus a risk-free asset. $400 is invested in stock A. Stock A has a beta of 1.3 and stock B has a beta of .7. How much needs to be invested in stock B if you want a portfolio beta of .90?
A. $0
B. $268
C. $482
D. $543
E. $600
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Solution Summary
The solution explains how to determine the amount to be invested in a given stock so as to get the required portfolio beta
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The portfolio beta is the weighted average beta of all the assets. The risk free asset has a beta of ...
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