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?

A) 0.026
B) 0.085
C) 0.160
D) 0.190
E) 0.220

Name: 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? A) 0.026 B) 0.085 C) 0.160 D) 0.190 E) 0.220
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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?

A) 0.026 
B) 0.085 
C) 0.160 
D) 0.190 
E) 0.220

Quizplus · Accepted Answer

β_p = w₁β₁+ . . . + w_nβ_n Recall that the beta of the risk free asset is 0. β_p = 0.40 × 0.40 + 0.60 × 0 = 0.16

Consider the Two Assets Outlined in the Table Below