Ask Question
BusinessBusiness
10 March, 17:10

SL Energy has $500,000 invested in a 2-stock portfolio. $250,000 is invested in Potts Manufacturing and the remainder is invested in Stohs Corporation. Potts' beta is 2.0 and Stohs' beta is 0.8. What is the portfolio's beta? the portfolio's beta?

+5
Answers (1)
  1. 10 March, 19:25
    0
    The portfolio's beta is 1.4

    Explanation:

    The portfolio beta is the weighted average of the individual betas of the stocks that form up the portfolio. For a two stock portfolio, the formula for portfolio beta can be written as:

    Portfolio beta = wA * βa + wB * βb

    Where,

    w represents the weightage of investments in stocks β represents the betas

    Investment in Potts = 250000

    Investment in Stohs = 500000 - 250000 = 250000

    The portfolio beta = (250000/500000) * 2 + (250000/500000) * 0.8

    Portfolio beta = 1.4
Know the Answer?
Not Sure About the Answer?
Find an answer to your question ✅ “SL Energy has $500,000 invested in a 2-stock portfolio. $250,000 is invested in Potts Manufacturing and the remainder is invested in Stohs ...” in 📘 Business if you're in doubt about the correctness of the answers or there's no answer, then try to use the smart search and find answers to the similar questions.
Search for Other Answers
You Might be Interested in
Consider the following information about a risky portfolio that you manage and a risk-free asset: E (rP) = 16%, σP = 26%, rf = 4%. a.
Answers (1)
The labor force participation rate is the percentage of the working-age population in the labor force.
Answers (1)
The accounting records for the Fox Hollow Company show that its cost of goods sold for the year was $300,000. In addition, it had an increase in inventory of $5,000 and a decrease in accounts payable of $6,000.
Answers (1)
Examine the following book-value balance sheet for University Products Inc. The preferred stock currently sells for $15 per share and pays a dividend of $3 a share. The common stock sells for $16 per share and has a beta of 0.9.
Answers (1)
What are some good ways to convince your mom to let you stay over your best friend house because of the rona?
Answers (1)
New Questions in Business
An advertiser enables target cost-per-acquisition (cpa) bidding and notices that conversions decrease. what might cause this?
Answers (1)
A trigger strategy is a strategy that: A. is not relevant to oligopolies. B. determines when to enter an industry. C. depends on an opponent's past decisions. D. tells a business to leave the industry because the price is below the AVC.
Answers (1)
What is the effect on the supply curve for skateboards if the government implements a tax on the manufacturing process?
Answers (1)
Cost of goods sold is: an asset account. a revenue account. an expense account. a permanent equity account.
Answers (1)
Markup represents an amount needed to cover operating expenses. a. True b. False
Answers (1)
Home » Business » SL Energy has $500,000 invested in a 2-stock portfolio. $250,000 is invested in Potts Manufacturing and the remainder is invested in Stohs Corporation. Potts' beta is 2.0 and Stohs' beta is 0.8. What is the portfolio's beta? the portfolio's beta?
Sign Up Forgot Password?