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17 May, 08:54

Consider the following information for three stocks, A, B, and C that can be put into portfolios with the following allocations.

Portfolio AC has 80% of its funds invested in Stock A and 20% in Stock C.

Portfolio BC has 20% of its funds invested in Stock B and 80% in Stock C.

Portfolio ABC has one third of its funds invested in each of the three stocks.

Stock Expected Return Standard Deviation Beta 1.0

A 10% 20% 1.0

B 10% 10% 1.0

С 12% 12% 1.5

Calculate the Beta of Portfolio AC to the second decimal place.

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Answers (1)
  1. 17 May, 09:31
    0
    Therefore, the Beta of Portfolio AC is 1.10

    Explanation:

    In order to calculate the Beta of Portfolio AC we would have to make the following calculation of the following formula according to the given dа ta:

    beta of Portfolio AC is given as=80%*1.0+20%*1.5

    beta of Portfolio AC is given as=0.8+0.3

    beta of Portfolio AC is given as=1.10

    Therefore, the Beta of Portfolio AC is 1.10
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