You invest $600 in a security with a beta of 1.2 and $400 in another security with a beta of 0.90.The beta of the resulting portfolio is
A)1.40.
B)1.00.
C)0.36.
D)1.08.

Question

Quizplus · Accepted Answer

Beta of portfolio = (Weight of security A * Beta of security A) + (Weight of security B * Beta of Security B)
= ((600/1000) * 1.2) + ((400/1000) * 0.90)
= 0.72 + 0.36
= 1.08
Therefore, the beta of the resulting portfolio is 1.08, which is Option D.

You Invest $600 in a Security with a Beta of 1.2