A portfolio comprises Cochlear (beta of 1.25)and Westpac (beta of 0.75). The amount invested in Cochlear is $10 000 and in Westpac is $20 000. What is the beta of the portfolio?
A)0.97
B)0.23
C)0.92
D)1.19

Question

Quizplus · Accepted Answer

Beta of portfolio = (amount invested in Cochlear * beta of Cochlear + amount invested in Westpac * beta of Westpac) / total amount invested

Beta of portfolio = (10,000*1.25 + 20,000*0.75)/(10,000+20,000) = 0.92

A Portfolio Comprises Cochlear (Beta of 1