You have a portfolio that is invested 23 percent in Stock A, 36 percent in Stock B, 41 percent in Stock C, and the remainder in a risk free asset. The betas of the stocks are .68, 1.23,and 1.52, respectively. What is the beta of the portfolio? O1.10 1.14 O122 1.18 O1.38

You have a portfolio that is invested 23 percent in Stock A, 36 percent in Stock B, 41 percent in Stock C, and the remainder in a risk free asset. The betas of the stocks are .68, 1.23,and 1.52, respectively. What is the beta of the portfolio? O1.10 1.14 O122 1.18 O1.38

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter2: Risk And Return: Part I

Section: Chapter Questions

Problem 1P: Your investment club has only two stocks in its portfolio. 20,000 is invested in a stock with a beta...

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Concept explainers

Risk and return

Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.

Capital Asset Pricing Model

Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.

Question

You have a portfolio that is invested 23 percent in Stock A, 36 percent in Stock B, 41 percent
in Stock C, and the remainder in a risk free asset. The betas of the stocks are.68, 1.23.and
1.52, respectively. What is the beta of the portfolio?
O1.10
1.14
O1.22
O118
O1.38

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