Question

You own a stock portfolio invested 35 percent in Stock Q, 17 percent in Stock R, 35 percent in Stock S, and 13 percent in Stock T. The betas for these four stocks are 1.04, 1.10, 1.50, and 1.95, respectively. What is the portfolio beta?

Answer 1

1.33

Step-by-step explanation:

Given that,

stock portfolio invested:

Stock Q = 35%

Stock R = 17%

Stock S = 35%

Stock T = 13%

Portfolio beta:

= (Weight of Q × Beta of Q) + (Weight of R × Beta of R) + (Weight of S × Beta of S) + (Weight of T × Beta of T)

= (0.35 × 1.04) + (0.17 × 1.10) + (0.35 × 1.50) + (0.13 × 1.95)

= 1.33