You currently own a portfolio valued at $80,000 that is equally as risky as the market.Given the information below,what is the beta of Stock C?
A)0.91
B)0.95
C)1.04
D)1.13
E)1.18

Question

You currently own a portfolio valued at $80,000 that is equally as risky as the market.Given the information below,what is the beta of Stock C? 
A)0.91 
B)0.95 
C)1.04 
D)1.13 
E)1.18

Quizplus · Accepted Answer

Value of risk-free asset = $80,000 - $24,600 - $17,500 - $32,000 = $5,900β_P = 1 = ($24,600/$80,000)(1.14) + ($17,500/$80,000)(1.06) + ($32,000/$80,000)(β_C) + ($5,900/$80,000)(0)β_C = 1.04

You Currently Own a Portfolio Valued at $80,000 That Is