Answer to Question #289914 in Finance for Karim

Question

Jack holds a portfolio which is currently worth $100,000. With Beta =2.

Jack received 20,000, so he decided to sell one of the securities with Beta=1 for $5,000 and use 25,000 to buy a new security B=2.5.

Calculate Beta of the new portfolio.

Answer 1

Answer

$2×100000=200000$

$2.5×25000= 62500$

Beta of the new portfolio becomes,

$\frac{200000+62500}{100000+25000}=2.1$