Your portfolio is comprised of 36 percent of Stock X, 18 percent of Stock Y, and 46 percent of Stock Z. Stock X has a beta of 1.

Question

dexar [7]

2 years ago

10

Your portfolio is comprised of 36 percent of Stock X, 18 percent of Stock Y, and 46 percent of Stock Z. Stock X has a beta of 1.

19, Stock Y has a beta of .87, and Stock Z has a beta of 1.26. What is the beta of your portfolio?

Business

1 answer:

VladimirAG [237] · Answer 1 · 2022-08-02T13:40:13+03:00

Answer:

Portfolio´s beta: 1.16

Explanation:

Stock Percent Beta Weighted Beta

X 36% 1,19 0,43

Y 18% 0,87 0,16

Z 46% 1,26 0,58

1,16

The portfolio beta is obtained by the sum of the individual betas of each stock considering it´s percent on the portfolio (weighted beta).

It represents the relative volatility of a portfolio relative to the market. More than one means more volatile and less than one means less volatile than the market.