Your portfolio has a beta of 1.12. The portfolio consists of 20 percent U.S. Treasury bills, 50 percent stock A, and 30 percent stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B?
A) 1.47
B) 1.52
C) 1.69
D) 1.84
E) 2.07

Question

Quizplus · Accepted Answer

Beta_Portfolio = 1.12 = (0.2 F1F1F1S1F1F1F10 0) + (0.5 F1F1F1S1F1F1F10 1) + (0.3 F1F1F1S1F1F1F10 F1F1F1S1F1F1F10_B); F1F1F1S1F1F1F10_B = 2.07The beta of a risk-free asset is zero. The beta of the market is 1.0.

Your Portfolio Has a Beta of 1