An Investor Is Considering the Three Stocks Given Below:
$\beta$

Essay

An investor is considering the three stocks given below:

C. Demonstrate that holding stock A actually reduces risk by comparing the risk of a portfolio equally weighted between stock B and T-Bills with a portfolio equally weighted between stock B and
A.
Stock B and C: Rp = .5(13.3%) + .5(9.2%) = 11.25%
Stock B and C: $\beta$ p = .5(2.1) + .5(0.75) = 1.425
Stock B and T-bills: $\beta$ B&TBILL = .5(2.1) + .5(0) = 1.05
Stock's B and A: $\beta$ B&A = .5(2.1) + .5(-0.1) = 1.00