You have a portfolio with a beta of 0.9. What will be the new portfolio beta if you keep 40 percent of your money in the old portfolio and 60 percent in a stock with a beta of 1.5?
A) 1.00
B) 1.20
C) 1.26
D) 2.40

Question

Quizplus · Accepted Answer

The new portfolio beta is a weighted average of the old portfolio beta and the new stock beta, with the weights being the proportions of the portfolio invested in each asset. So, the new portfolio beta is:0.4 * 0.9 + 0.6 * 1.5 = 1.26

You Have a Portfolio with a Beta of 0