Question 2 Risk and Return 4 marks Richard Risk has created a portfolio invested as follows: 25% of Richards total portfolio value is invested in Geelong Ltd; 32% is invested in Carlton Ltd, 28% is invested in Adelaide Ltd, with the remainder invested in West Coast Ltd. Required: (Marks are awarded for workings, so please show all workings). A. If the shares in Richardss portfolio have the following Betas, calculate the Beta of the portfolio. (2 marks) B. Richard wants to reduce the portfolio beta coefficient of the portfolio. I. What type of risk is Richard trying to reduce? (1 mark) II. How could Richard do this, and would there be a cost in doing so? (1 mark)

Question 2 - Risk and Return - 4 marks Richard Risk has created a portfolio invested as follows: 25% of Richard's total portfolio value is invested in Geelong Ltd; 32% is invested in Carlton Ltd, 28% is invested in Adelaide Ltd, with the remainder invested in West Coast Ltd. Required: (Marks are awarded for workings, so please show all workings). A. If the shares in Richards's portfolio have the following Beta's, calculate the Beta of the portfolio (2 marks) Geelong Ltd. Carlton Ltd. Adelaide Ltd. West Coast Ltd. Beta 1.22 1.54 0.85 0.72 B. Richard wants to reduce the portfolio beta coefficient of the portfolio. I. What type of risk is Richard trying to reduce? (1 mark) II. How could Richard do this, and would there be a cost in doing so? (1 mark)