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If a portfolio of the two assets has an expected return of 7 percent, what is its beta? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.161.)

Respuesta :

Answer:

the beta of the portfolio is 0.562

Explanation:

The computation of the beta is shown below:

As we know that

Expected return of portfolio = return of stock × weightage of stock + return of risk free asset × weightage of risk free asset

7% = 11% × weightage of stock + 2.4% × (1 - weightage of stock)

weightage of stock = 0.535

Now Beta of portfolio is

= 1.05 × 0.535

= 0.562

hence, the beta of the portfolio is 0.562

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