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FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jason Jackson is attempting to evaluate two possible portfolios 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:
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a. Calculate the betas for portfolios A and B.
b. Compare the risk of each portfolio to the market as well as to each other. Which portfolio is more​ risky?
 
 
 
 

Question content area bottom

Part 1
Data table
​(Click on the icon here
  
in order to copy its contents of the data table below into a​ spreadsheet.)
 
 
 
Portfolio Weights
Asset
Asset Beta
Portfolio A
Portfolio B
1
1.35
17​%
 
29​%
 
2
0.69
26​%
 
8​%
 
3
1.24
10​%
 
22​%
 
4
1.06
11​%
 
20​%
 
5
0.87
36%
 
21%
 
Total
100%
 
100%
a. The beta of portfolio A is
enter your response here.
​(Round to three decimal​ places.)
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