Answer:
Beta for the other stock = 1.88
Explanation:
A portfolio is said to be as risky as the market where its beta is exactly equal to 1. A beta of greater than 1 implies the portfolio is riskier than the average market, and less risky where the beta is less than 1.
A portfolio that has an equal proportion of three asset would mean a weight of 1/3 for each asset
So we can represent the portfolio beta as follows:
1 = 1/3×(0) + 1/3× (1.12) + 1/3×y
1= 0.37 + 0.33y
0.33y = 0.626
y= 0.626/0.33
y= 1.88
Beta for the other stock = 1.88
