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Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in

Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in using beta to compare the risks of the portfolios, so she has gathered the data shown in the following table

Portfolio weights

Asset

Asset beta

Portfolio A

Portfolio B

1

1.82

15%

30%

2

0.75

35%

5%

3

1.46

10%

30%

4

1.18

10%

20%

5

0.33

30%

15%

Totals

100%

100%

a. Calculate the betas for portfolios A and B.

b. Compare the risks of these portfolios to the market as well as to each other. Which portfolio is more risky?

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