Answer:

Portfolio weight of Stock A

= $37,500/$100,000

= 0.375

Portfolio weight of Stock B

= ($100,000 – $37,500)/ $100,000

= 0.625

Portfolio beta of Stock A

= 0.375 x 0.75

= 0.281

Portfolio beta of Stock B

= 0.625 x 1.42 = 0.887

Troy’s portfolio beta

= 0.281 + 0.887

=1.174