Answer and Explanation:
The computation of the portfolio weighted of UPS and FedEx is shown below:
Let us assume the weight of UPS be x
And, the weight of FedEx be (1 - x)
As we know that
Portfolio beta = Respective beta × Respective weight
1.08 = (x × 1.5) + (1 - x) × 0.9
1.08 = 1.5x + 0.9 - 0.9x
x = (1.08 - 0.9) ÷ (1.5 - 0.9)
x = 0.30 or 30%
= UPS weight
And, the weight of FedEx is
= 1 - x
= 1 - 0.30
= 0.70
