Question

You own a stock portfolio invested 16 percent in Stock Q, 24 percent in Stock R, 36 percent in Stock S, and 24 percent in Stock T. The betas for these four stocks are .94, 1.00, 1.40, and 1.85, respectively. What is the portfolio beta?

Answer 1

1.3384

Step-by-step explanation:

The computation of the portfolio beta is shown below:

= Stock Q × beta of stock Q + Stock R × beta of stock R + Stock S × beta of Stock S + Stock T × beta of Stock T

= 0.16 × 0.94 + 0.24 × 1 + 0.36 × 1.4 + 0.24 × 1.85

= 1.3384

We simply applied the above formula to determine the portfolio beta and the same is to be considered