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25 September, 16:49

You decide to invest $20,500 in Bank of America and $14,500 in Twitter. What is the portfolio's beta? Bank of America beta: 1.27 Twitter beta: 1.96

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  1. 25 September, 17:27
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    Bp = 1.56

    Explanation:

    Giving the following information:

    You decide to invest $20,500 in Bank of America and $14,500 in Twitter.

    Bank of America beta: 1.27 Twitter beta: 1.96

    We need to use the following formula:

    Bp = Wa*Ba + Wb*Bb

    W = weighted average invest

    B = beta

    Bp = (20,500/35,000) * 1.27 + (14,500/35,000) * 1.96 = 1.56
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