You have a portfolio with a beta of 1.65. What will be the new portfolio beta if

Question

You have a portfolio with a beta of 1.65. What will be the new portfolio beta if you keep 91 percent of your money in the old portfolio and 9 percent in a stock with a beta of 0.70? (Do not round intermediate calculations and round your answer to 2 decimal places.)

You have a portfolio with a beta of 1.65. What will be the new portfolio beta if you keep 91 percent of your money in the old portfolio and 9 percent in a stock with a beta of 0.70? (Do not round intermediate calculations and round your answer to 2 decimal places.)

Explanation / Answer

Beta(new portfolio) = beta(old portfolio) * percentage in old portfolio + beta(new asset) * percentage in new asset

= 1.65 * 91% + 0.7 * 9%

= 1.5645

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