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Sonbull [250]
4 years ago
15

You own a stock portfolio invested 34 percent in Stock Q, 18 percent in Stock R, 36 percent in Stock S, and 12 percent in Stock

T. The betas for these four stocks are 1.03, 1.09, 1.49, and 1.94, respectively. What is the portfolio beta
Business
1 answer:
Step2247 [10]4 years ago
4 0

Answer:

Portfolio beta = 1.3156

Explanation:

The portfolio beta is a function of the weighted average of the individual stocks betas' that form up the portfolio. To calculate the portfolio beta, we use the following formula,

Portfolio beta = wA * Beta of A + wB * Beta of B + ... + wN * Beta of N

Where,

  • w represents the weight of each stock in portfolio

Portfolio beta = 0.34 * 1.03  +  0.18 * 1.09  +  0.36 * 1.49  +  0.12 * 1.94

Portfolio beta = 1.3156

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