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The table below shows the betas and portfolio weights for 3 stocks: Portfolio weights Stock Beta Portfolio 1 Portfolio 2 A 1.6 0.3 0.1 B

The table below shows the betas and portfolio weights for 3 stocks:

Portfolio weights

Stock Beta Portfolio 1 Portfolio 2

A 1.6 0.3 0.1

B 1.1 0.5 0.4

C 0.3 0.2 0.5

Calculate the beta of each portfolio

Part 1

What is the beta of portfolio 1?

Part 2

What is the beta of portfolio 2?

Part 3

If you are more concerned about risk than return, which portfolio should you pick? Portfolio 2

Portfolio 1

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