What is the portfolio beta

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Reference no: EM132050146

1. Ali invests 70% of his portfolio in Qibla Cola and 30% in Sahabah Shoes.  The expected dollar return on Qibla Cola is 15% with a standard deviation of 23%, while for Sahabah shoes it’s 40% with a standard deviation 51%. By assuming beta of Qibla Cola is 0.9 and beta of Sahabah Shoes is 1.3, T-bills rate is 5% and the market premium risk is 7%, do the following:

Based on the above data, what is the portfolio's beta?

a. 0.98

b. 1.14

c. 0.85

d. 1.02

e. 1.15

2. Assume the risk free rate is 8%, required return is 15% and market return is 14%, the beta of the stock is if the market risk of a stock is more than the average, a possible value of Beta would be

a. 1.5

b. -0.5

c. 0.8

d. 1.0

e. None of these

Reference no: EM132050146

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