An individual has $35,000 invested in a stock which has a beta of 0.8 and $40,000 invested in a stock with a beta of 1.4. If these are the only two investments in her portfolio, what is the beta of her portfolio?

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The beta of a portfolio of investments is given by the sum of the product of the beta of each of the investments and the percentage of the total portfolio that the investment constitutes.

In the question, the individual has a portfolio made of two investments. $35000 is invested in...

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The beta of a portfolio of investments is given by the sum of the product of the beta of each of the investments and the percentage of the total portfolio that the investment constitutes.

In the question, the individual has a portfolio made of two investments. $35000 is invested in a stock with a beta of 0.8 and $40000 is invested in a stock with a beta of 1.4. The total value of the portfolio is $75000.

The beta of the portfolio of the two stocks is give by 0.8*35000/75000 + 1.4*40000/75000 = 1.12

The beta of her portfolio is 1.12.

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