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What is the approximate beta of the portfolio

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Reference no: EM132928036

Problem 1: Abrams builds a portfolio by investing in two stocks only: Microsoft (MSFT) and Motorola (MSI). According to the CAPM, the expected risk premium (i.e., the expected return minus the risk-free rate) of MSFT is 13.68% and the expected risk premium of MSI is 5.95%. The beta of MSFT is equal to 1.17. If Abrams puts 75% of his money in MSFT stock and 25% in MSI stock, what is the approximate beta of his portfolio?

Reference no: EM132928036

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