You own a portfolio equally invested in a risk-free asset and two stocks (If one of the stocks has a beta of 1.68 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? (Hint: Remember that the market has a Beta=1; also remember that equally invested means that each asset has the same weight- since there are 3 assets, each asset's weight is 1/3 or 0.3333. Use 0.333333, and not only 0.33, sorry, calculation is sensitive to it).

You own a portfolio equally invested in a risk-free asset and two stocks (If one of the stocks has a beta of 1.68 and the total portfolio is equally as risky as the market, what must the beta be for the other stock in your portfolio? (Hint: Remember that the market has a Beta=1; also remember that equally invested means that each asset has the same weight- since there are 3 assets, each asset's weight is 1/3 or 0.3333. Use 0.333333, and not only 0.33, sorry, calculation is sensitive to it).

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 6P

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