Question

You own a stock portfolio invested 28 percent in Stock Q, 16 percent in Stock R, 42 percent in Stock S, and 14 percent in Stock T. The betas for these four stocks are .97, 1.03, 1.43, and 1.88, respectively. What is the portfolio beta

Answer 1

Beta= 1.3002

Step-by-step explanation:

Giving the following information:

You own a stock portfolio invested 28 percent in Stock Q, 16 percent in Stock R, 42 percent in Stock S, and 14 percent in Stock T. The betas for these four stocks are .97, 1.03, 1.43, and 1.88, respectively.

To calculate the beta of the portfolio, we need to use the following formula:

Beta= (proportion of investment A*beta A) + (proportion of investment B*beta B) + ... + (proportion of X*bet X)

Beta= (0.28*0.97) + (0.16*1.03) + (0.42*1.43) + (0.14*1.88)

Beta= 1.3002