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You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T. The betas for these four stocks are 1.63, 1.35, 2.56, and 0.68, respectively. What is the portfolio beta? Enter the answer with 4 decimals (e.g. 1.1234)

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Answer:

Beta= 1.4886

Step-by-step explanation:

Giving the following information:

You own a stock portfolio invested 32 percent in Stock Q, 22 percent in Stock R, 19 percent in Stock S, and 27 percent in Stock T.

The betas for these four stocks are 1.63, 1.35, 2.56, and 0.68, respectively.

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

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

Beta= (0.32*1.63) + (0.22*1.35) + (0.19*2.56) + (0.27*0.68)

Beta= 1.4886

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