You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and stock B. If the beta of the stock A is 1.57 and the beta of the portfolio is 1.08, what does the beta of stock B have to be?

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter6: Risk And Return
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Problem 14P: You have observed the following returns over time: Assume that the risk-free rate is 6% and the...
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You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and stock B. If the beta of the stock A is 1.57 and the beta of the portfolio is 1.08, what
does the beta of stock B have to be?
Transcribed Image Text:You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and stock B. If the beta of the stock A is 1.57 and the beta of the portfolio is 1.08, what does the beta of stock B have to be?
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