Consider the following information on the stock portfolio of the Gainesville Cit

ID: 2461827 • Letter: C

Question

Consider the following information on the stock portfolio of the Gainesville City Meter Maid Retirement Fund: Business Machines, Inc.: $400,000 investment Beta coefficient: 1.2 Gold Rush Mining: $600,000 investment Beta coefficient: –0.4 Humanity Healthcare: $1,000,000 investment Beta coefficient: 1.5 Home Supply Source: $2,000,000 investment Beta coefficient: 0.8 Total investment amount: $4,000,000 What is the beta coefficient of this portfolio? Given Answer: 0.730 Correct Answer: 0.835 I need this problem worked out. The answer posted in chegg was wrong. I need the step to solve this problem. Consider the following information on the stock portfolio of the Gainesville City Meter Maid Retirement Fund: Business Machines, Inc.: $400,000 investment Beta coefficient: 1.2 Gold Rush Mining: $600,000 investment Beta coefficient: –0.4 Humanity Healthcare: $1,000,000 investment Beta coefficient: 1.5 Home Supply Source: $2,000,000 investment Beta coefficient: 0.8 Total investment amount: $4,000,000 What is the beta coefficient of this portfolio? Given Answer: 0.730 Correct Answer: 0.835 I need this problem worked out. The answer posted in chegg was wrong. I need the step to solve this problem. Consider the following information on the stock portfolio of the Gainesville City Meter Maid Retirement Fund: Business Machines, Inc.: $400,000 investment Beta coefficient: 1.2 Gold Rush Mining: $600,000 investment Beta coefficient: –0.4 Humanity Healthcare: $1,000,000 investment Beta coefficient: 1.5 Home Supply Source: $2,000,000 investment Beta coefficient: 0.8 Total investment amount: $4,000,000 What is the beta coefficient of this portfolio? Given Answer: 0.730 Correct Answer: 0.835 I need this problem worked out. The answer posted in chegg was wrong. I need the step to solve this problem.

Explanation / Answer

Answer

Name of Stock

Investment

Weight of investment

Beta Coefficient

Weighted Average

A*B

Business Machines Inc.

400000

0.1

1.2

0.12

Gold rush Mining

600000

0.15

-0.4

-0.06

Huminty Healthcare

1000000

0.25

1.5

0.375

Home Supply Source

2000000

0.5

0.8

0.4

Total investment

4000000

Weighted Average Beta

0.835

Answer : The beta coefficient of this portfolio is 0.835