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5.4 Prove that the portfolio beta is the weighted average of the beta of each asset in the portfolio, with the weight being that in terms of the asset value. (To keep it simple, do this for a portfolio of three assets.)

5.4 Prove that the portfolio beta is the weighted average of the beta of each asset in the portfolio, with the weight being that in terms of the asset value. (To keep it simple, do this for a portfolio of three assets.)

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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5.4 Prove that the portfolio beta is the weighted average of the beta of each asset in the portfolio, with the weight being that in terms of the asset value. (To keep it simple, do this for a portfolio of three assets.)
Transcribed Image Text:5.4 Prove that the portfolio beta is the weighted average of the beta of each asset in the portfolio, with the weight being that in terms of the asset value. (To keep it simple, do this for a portfolio of three assets.)
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