if you could show work please Portfolio betas Personal Finance Problem Rose Berr

Question

if you could show work please

Portfolio betas Personal Finance Problem 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: Calculate the betas for portfolios a and B. Compare the risks of these portfolios to the market as well as to each other. Which portfolio is more risky?

Explanation / Answer

Hi, If you like my answer rate me lifesaver first...that way only I can earn points. Thanks Portfolio beta = weighted sum of individual asset betas Asset Beta Portfolio A Portfolio B 1 1.37 20% 25% 2 0.75 30% 5% 3 1.16 5% 35% 4 1.88 10% 20% 5 0.93 35% 15% Portfolio A Beta = 20% * 1.37 + 30% * 0.75 + 5%*1.16 + 10%*1.88 + 35%*0.98 = 1.0705 similarly, portfolio B Beta = 1.3015 beta represents systematic risk. So, Portfolio B has more systematic risk than A and also, since beta>1 so, it is more risky than market.

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