What is the portfolio beta? Enter the answer with 4 decimals (e.g. 1.1234)

Question

590 viewsOctober 4, 2016

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Darshita 6.14K October 4, 2016 0 Comments

You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T. The betas for these four stocks are 0.79, 1.96, 0.90, and 0.92, respectively. What is the portfolio beta? Enter the answer with 4 decimals (e.g. 1.1234)

1 Answer

score 0 · Answer 1 · 2016-10-04T15:11:42+00:00

Answer: the portfolio beta =1.10

Working notes for the above answer is under

We have been provided with the information as follow

Stock	Beta	Weight
Stock Q	0.79	32%
Stock R	1.96	22%
Stock S	0.9	19%
Stock T	0.92	27%
		100%

Now we will calculate , the portfolio beta as follow

Stock	Beta	Weight	Toatal Beta
	(A)	(B)	(A) * (B)
Stock Q	0.79	32%	0.2528
Stock R	1.96	22%	0.4312
Stock S	0.9	19%	0.171
Stock T	0.92	27%	0.2484
			1.1034

the portfolio beta =1.10

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