3. Portfolio betas (S8.1) A portfolio contains equal investments in 10 stocks. Five have a beta of...

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3. Portfolio betas (S8.1) A portfolio contains equal investments in 10 stocks. Five have a beta of 1.2; the remainder have a beta of 1.4. What is the portfolio beta?

a. 1.3.

b. Greater than 1.3 because the portfolio is not completely diversified.

c. Less than 1.3 because diversification reduces beta.

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Principles Of Corporate Finance

ISBN: 9781264080946

14th Edition

Authors: Richard Brealey, Stewart Myers, Franklin Allen, Alex Edmans

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Question Posted: Jul 31, 2024 08:00 AM

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3. Portfolio betas (S8.1) A portfolio contains equal investments in 10 stocks. Five have a beta of...

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Principles Of Corporate Finance

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