Question

You own a stock portfolio invested 30 percent in Stock Q, 25 percent in Stock R, 25 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are .80, 1.18, 1.19, and 1.36, respectively. What is the portfolio beta

Answer 1

The Portfolio beta is 1.1045

Step-by-step explanation:

The computation of the portfolio beta is given below:

Stock Beta Investment (Weight) Weighted Beta

Stock Q 0.8 0.3 0.2400

Stock R 1.18 0.25 0.2950

Stock S 1.19 0.25 0.2975

Stock T 1.36 0.2 0.2720

Portfolio beta 1.1045