Question

Suppose you put half of your money in Monster Beverage and half in IBM. What would the beta of this combination be if Monster Beverage has a beta of 1.52 and Pepsi has a beta of .55

Answer 1

Answer:

1.04

Explanation:

Monster beverage has a beta of 1.52

Pepsi has a beta of 0.55

Suppose half of your money is invested into Monster beverage and IBM

Then the beta of the combination can be calculated as follows

= (1/2 × 1.52) + (1/2 × 0.55)

= (0.5 × 1.52) + (0.5 × 0.55)

= 0.76+0.275

= 1.04

Hence the beta of the combination is 1.04