Question

You have a $40,000 portfolio consisting of Intel, GE, and Con Edison. You put $23,200 in Intel, $8,000 in GE, and the rest in Con Edison. Intel, GE, and Con Edison have betas of 1.3, 1, and .8, respectively. What is your portfolio beta

Answer 1

1.13

Step-by-step explanation:

Calculation to determine What is your portfolio beta

Portfolio beta=(23200/40000)(1.3)+(8000/40000)(1)+[(40,000-23200+8000)/40000)*(0.8)]

Portfolio beta=(23200/40000)(1.3)+(8000/40000)(1)+(8800/40000)*(0.8)

Portfolio beta=0.754+0.2+0.176

Portfolio beta= 1.13

Therefore your portfolio beta is 1.13