You own 400 shares of Stock A at a price of $50 per share, 290 shares of Stock B at $75 per share, and 700 shares of Stock C at

Question

3 years ago

6

$27 per share. The betas for the stocks are .6, 1.2, and .5, respectively. What is the beta of your portfolio

1 answer:

andreev551 [17] · Answer 1 · 2022-08-23T08:29:50+03:00

Answer:

0.67

Explanation:

Beta measures the systemic risk of a portfolio

The portfolio's beta can be determined by adding together the weighted beta of each stock in the portfolio

weighed beta of a stock = percentage of the stock in the portfolio x beta of the stock

total number of stocks in the portfolio 400 + 290 + 700 = 1390

(400 / 1390 x 0.6) + (290 / 1390 x 1.2) + (700 / 1390 x 0.5) =

0.17 + 0.25 + 0.25 = 0.67