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7 December, 17:39

You have $100,000 invested in a 2-stock portfolio. $30,000 is invested in stock with a beta of 1.60 and the remainder is invested in a stock with a beta of. 60. What is the portfolio's beta

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  1. 7 December, 17:45
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    the portfolio's beta is 0.9

    Explanation:

    The portfolio's beta is a weighted average of the individual security betas as follows:

    = [ ($30,000 / $100,000) * 1.60] + [ ($70,000 / $100,000) 0.60]

    = [$0.3 * 1.6] + [$0.7 * 0.6]

    = 0.48 + 0.42

    = 0.9

    So, the portfolio's beta = 0.9
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