Answer:
1.99
Explanation:
The computation of portfolio's beta is shown below:-
Total Portfolio value = Value of Stock 1 + Value of Stock 2
= $20,000 + $55,000
= $75,000
Weight of Stock 1 = Value of Stock 1 ÷ Total Portfolio Value
= $20,000 ÷ $75,000
= 0.2667
Weight of Stock 2 = Value of Stock 2 ÷ Total Portfolio Value
= $55,000 ÷ $75,000
= 0.7333
Beta of Portfolio = Weight of Stock 1 × Beta of Stock 1 + Weight of Stock 2 × Beta of Stock 2
= 0.6 × 0.2667 + 2.5 × 0.7333
= 1.99
So, for computing the portfolio's beta we simply applied the above formula.
