Question

You own a stock portfolio invested 25 percent in Stock Q, 20 percent in Stock R, 10 percent in Stock S, and 45 percent in Stock T. The betas for these four stocks are 1.32, 1.26, 1.52, and 1.06, respectively. What is the portfolio beta?

Answer 1

Answer: 1.211

Step-by-step explanation:

From the question, we are informed that an individual own a stock portfolio invested 25 percent in Stock Q, 20 percent in Stock R, 10 percent in Stock S, and 45 percent in Stock T and that the betas for these four stocks are 1.32, 1.26, 1.52, and 1.06, respectively.

The portfolio beta will be calculated as:

= (shares of Q × Beta of Q) + (shares of R × Beta R) + (shares of S × Beta S) + (shares of R * Beta T))/ Total Shares

=(25 × 1.32) + (20 × 1.26) + (10 × 1.52) + (45 × 1.06)/100

= (33 + 25.2 + 15.2 + 47.7) / 100

= 121.1/100

= 1.211