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Lucas builds a portfolio by investing in two stocks only: Google (GOOG) and Huawei (SHE). According to the CAPM, the expected risk premium (i.e., the
Lucas builds a portfolio by investing in two stocks only: Google (GOOG) and Huawei (SHE). According to the CAPM, the expected risk premium (i.e., the expected return minus the risk-free rate) of GOOG is 11.37% and the expected risk premium of SHE is 6.45%. The beta of GOOG is equal to 1.13. If Lucas puts 64% of his money in GOOG stock and 36% in SHE stock, what is the approximate beta of his portfolio?
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