Suppose that two stocks a and b and the market portfolio m, Ask an Expert

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Suppose that two stocks, A and B, and the market portfolio, M, have the following characteristics: Corr(A,M) = 0.8; Corr(B,M) = 0.6; ?2M = 0.1225; ?2A = 0.0784 and ?2B = 0.090. The total value of the portfolio is $2,000 of which 2/3 is invested in Stock B. [Note: Corr ( ) = Correlation coefficient]

A. Find the beta of the portfolio formed of A and B. Please show work
B. Find the amount of Stock B's diversifiable risk. Please show work

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9873145

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