Question

Joel owns the following portfolio of securities. What is the beta for the portfolio?Company Beta Percent of PortfolioExxon-Mobil .95 40%Pacific Industries 1.20 35%Payson Restaurants 1.35 25%A) 1.0000B) 0.9500C) 1.1375D) 1.1705

Answer 1

Answer:

the beta of the portfolio is 1.1375

Explanation:

The computation of the beta of the portfolio is as follows:

= Company beta × portfolio percentage

= 0.95 × 0.40 + 1.20 × 0.35 + 1.35 × 0.25

= 0.38 + 0.42 + 0.3375

= 1.1375

Hence the beta of the portfolio is 1.1375

We simply applied the above formula so that the correct beta could come