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Homework Help Forum: Finance
Posted by brandon on Monday, October 26, 2009 at 10:26pm.
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You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. The one stock has a beta of .80. What does the beta of the second stock have to be if you want the portfolio risk to equal that of the overall market?
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- Finance - Ms. Sue, Monday, October 26, 2009 at 11:01pm
A risk-free asset has a beta of 0. The average market beta is 1.0
0.8 + x = 3.0
x = 3 - 0.8
x = 2.2
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