Answer :
Answer: 2.77
Explanation:
Portfolio Beta is the Weighted Average Beta of all the individual stocks in a portfolio.
Seeing as the other betas and proportions are given, we can plug this into a formula to find out the beta of stock B.
In case you do not see a beta for the U.S. Treasury bills that's fine because beta is a measure of risk and U.S. Treasury bills have NONE so that means that their better is 0.
And if you are wondering what the beta of stock A is, the answer is 1 because that is the beta of the overall market by definition.
Creating a formula therefore we have,
1.75 = 0.17(0) + 0.31(1) + 0.52x
0.52x = 1.75 - 0.31
0.52x = 1.44
x = 2.76923076923
x = 2.77 (2dp)
2.77 is the beta of Stock B.
Answer:
2.53
Explanation:
Stock A beta would be equal to 1
Portfolio beta=Respective betas*Respective weights
1.75=(0.17*0)+(0.31*1)+(0.57*beta of stock B)(Beta of Treasury bills=0)
1.75=0.31+0.57beta of stock B
Hence beta of stock B=(1.75-0.31/0.57
=2.53(Approx)