ortfolio betas Personal Finance Problem Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in using beta to compare the risks of the portfolios, so she has gat e data shown in the following table: Calculate the betas for portfolios A and B. Compare the risks of these portfolios to the market as well as to each other. Which portfolio The beta for portfolio A is. (Round to four decimal places.) more risky?
ortfolio betas Personal Finance Problem Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in using beta to compare the risks of the portfolios, so she has gat e data shown in the following table: Calculate the betas for portfolios A and B. Compare the risks of these portfolios to the market as well as to each other. Which portfolio The beta for portfolio A is. (Round to four decimal places.) more risky?
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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Transcribed Image Text:Portfolio betas Personal Finance Problem Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in using beta to compare the risks of the portfolios, so she has gathered
the data shown in the following table:
a. Calculate the betas for portfolios A and B.
b. Compare the risks of these portfolios to the market as well as to each other. Which portfolio is more risky?
a. The beta for portfolio A is
(Round to four decimal places.)
C
Transcribed Image Text:Asset
12345
2
Totals
Asset beta
1.59
0.94
1.88
1.18
0.37
Portfolio weights
Portfolio A
15%
40%
10%
10%
25%
100%
Portfolio B
30%
15%
20%
10%
25%
100%
Expert Solution
Step 1: Concept.
Beta is also known as systematic risk.
If there are two assets , then the asset having higher beta is more risky as compared to other asset.
Beta of market is always 1.
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