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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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