Portfolio Beta 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

First, we need to calculate the beta of the new stock allocation:

New portfolio beta = (0.9 x 0.4) + (1.5 x 0.6) 
New portfolio beta = 0.36 + 0.9 
New portfolio beta = 1.26

Therefore, the answer is choice C: 1.26.

Portfolio Beta You Have a Portfolio with a Beta of 0.9.What