Jack Ma is attempting to evaluate two possible portfolios – both consisting of the same five assets but held in different proportions. He is particularly interested in using beta to compare the risk of the portfolios and in this regard has gathered the following data. assets assets beta Portfolio A Portfolio B 1 1.30 10% 30% 2 0.70 30% 10% 3 1.25 10% 20% 4 1.10 10% 20% 5 0.90 40% 20% a) Calculate the betas for portfolio A and B. b) Compare the risk of each portfolio to the market as well as to each other C) Which portfolio is more risky and why?
Jack Ma is attempting to evaluate two possible portfolios – both consisting of the same five assets but held in different proportions. He is particularly interested in using beta to compare the risk of the portfolios and in this regard has gathered the following data.
assets assets beta Portfolio A Portfolio B
1 1.30 10% 30%
2 0.70 30% 10%
3 1.25 10% 20%
4 1.10 10% 20%
5 0.90 40% 20%
a) Calculate the betas for portfolio A and B.
b) Compare the risk of each portfolio to the market as well as to each other
C) Which portfolio is more risky and why?
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