Consider the two assets outlined in the table below. What is the beta of the two asset portfolio given that 40% is invested in X? $$\begin{array} { | c | c | c | }
\hline \text { Asset } & \begin{array} { c }
\text { Expected } \
\text { Return }
\end{array} & \text { Beta } \
\hline X & 12 \% & 0.40 \
\hline \text { Risk Free } & 5 \% & 0 \
\hline
\end{array}$$
A)0.026
B)0.085
C)0.160
D)0.190
E)0.220

Question

Consider the two assets outlined in the table below. What is the beta of the two asset portfolio given that 40% is invested in X? $$\begin{array} { | c | c | c | } 
\hline \text { Asset } & \begin{array} { c } 
\text { Expected } \
\text { Return }
\end{array} & \text { Beta } \
\hline X & 12 \% & 0.40 \
\hline \text { Risk Free } & 5 \% & 0 \
\hline
\end{array}$$
A)0.026
B)0.085
C)0.160
D)0.190
E)0.220

Quizplus · Accepted Answer

The portfolio beta is calculated as the weighted sum of the betas of the individual assets. Here, 40% is invested in Asset X with a beta of 0.40, and 60% is invested in the risk-free asset with a beta of 0. Therefore, the portfolio beta = (0.40 * 0.40) + (0.60 * 0) = 0.16.

Consider the Two Assets Outlined in the Table Below A)0026 B)0

Consider the Two Assets Outlined in the Table Below A)0026
B)0