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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 2 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 2 0.3 0.1
B 1.1 0.5 0.4
C 0.4 0.2 0.5

Calculate the beta of each portfolio.

Part 1

What is the beta of portfolio 1?

What is the beta of portfolio 2?

Part 3

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

Portfolio 1

Portfolio 2

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