question archive You want to construct a portfolio containing equal amounts of U
You want to construct a portfolio containing equal amounts of U
Subject:FinancePrice:2.86 Bought8
You want to construct a portfolio containing equal amounts of U.S. Treasury bills, stock A, and stock B. If the beta of the stock A is 1.46 and the beta of the portfolio is 0.93, what does the beta of stock B have to be?
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
TB is the treasury bills
Beta of treasury bills is 0.
Portfolio beta = (Weight TB * Beta of TB) + (Weight of stock A * Beta of stock A)+(Weight of stock B * Beta of stock B)
0.93 = ((1/3)*0) + ((1/3)*1.46) + ((1/3) * Beta of stock B)
Beta of stock B 0.33333 = 0.443333
Beta of stock B = 1.33
