A portfolio contains two assets.The first asset represents 25 percent of the portfolio and has a beta of 1.4.If the portfolio beta is 1.25,what is the beta of the second asset?
A)1.10
B)1.36
C)1.20
D)1.40
E)1.27

Name: A portfolio contains two assets.The first asset represents 25 percent of the portfolio and has a beta of 1.4.If the portfolio beta is 1.25,what is the beta of the second asset? A)1.10 B)1.36 C)1.20 D)1.40 E)1.27
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Question

Quizplus · Accepted Answer

βp = 1.25 = .25(1.4)+ (1 - .25)β₂β₂ = 1.20

A Portfolio Contains Two Assets