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A Portfolio Comprises Coke (Beta of 1

question 91

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A portfolio comprises Coke (beta of 1.3) and Wal-Mart (beta of 0.8) .The amount invested in Coke is $20,000 and in Wal-Mart is $20,0000.What is the beta of the portfolio?


Definitions:

Mean-Variance Efficient Portfolio

An investment portfolio that aims for the highest expected return for a given level of risk or the lowest level of risk for a given expected return.

Single-Index Structure

A model used in finance that relates the returns of a stock to the returns of a market index through a single beta factor.

Covariances

A measure indicating the extent to which two variables change in tandem over time.

Well-Diversified Portfolio

A collection of investments that spans various assets to minimize risk while maximizing returns.

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