Answer:
1.05142
Explanation:
Given that,
portfolio consisting of Intel, GE, and Con Edison = $56,000
Amount put in Intel = $22,400
Amount put in GE = $14,400
Amount put in Con Edison = $19,200
Beta for Intel = 1.3
Beta for GE = 1
Beta for Con Edison = 0.8
Weight of investment of Intel:
= Amount put in Intel ÷ Total investment
= $22,400 ÷ $56,000
= 0.4 or 40%
Weight of investment of GE:
= Amount put in GE ÷ Total investment
= $14,400 ÷ $56,000
= 0.2571 or 25.71%
Weight of investment of Con Edison:
= Amount put in Con Edison ÷ Total investment
= $19,200 ÷ $56,000
= 0.3429 or 34.29%
Port folio beta:
= Beta × Weight of investment
= (1.3 × 40%) + (1 × 25.71%) + (0.8 × 34.29%)
= 0.52 + 0.2571 + 0.27432
= 1.05142
