Question: Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in

Rose Berry is attempting to evaluate two possible portfolios, which consist of the same five assets held in different proportions. She is particularly interested in using beta to compare the risks of the portfolios, so she has gathered the data shown in the following table.

a. Calculate the betas for portfolios A and B.
b. Compare the risks of these portfolios to the market as well as to each other. Which portfolio is morerisky?

Portfolio wcights Portfolio APortfolio B Assct Assct beta 1.30 0.70 1.25 1.10 0.90 30% 10 20 20 10 10 Totals 100% 100%

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a Portfolio A Portfolio B Asset Beta w A w A b A w B w B b B 1 130 010 0130 030 039 2 07... View full answer

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