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You have a $45,000 portfolio consisting of Intel, GE, and Con Edison. You put $21,200 in Intel, $10,000 in GE, and the rest in Con Edison. Intel, GE, and Con Edison have betas of 1.3, 1, and .8, respectively.
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You have a $45,000 portfolio consisting of Intel, GE, and Con Edison. You put $21,200 in Intel, $10,000 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

User Abdallah Sakre
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4 votes

Answer:

The portfolio beta is 1.08

Step-by-step explanation:

The portfolio beta is the function of the weighted average of the individual stock betas that form up the portfolio. The weighatge is assigned to the stocks based on the investment in the stock as a proportion of the total investment in the portfolio. Thus, the portfolio beta is,

The investment in Con Edison = 45000 - 21200 - 10000 = $13800

Portfolio beta = 21200/45000 * 1.3 + 10000/45000 * 1 + 13800/45000 * 0.8

Portfolio beta = 1.08

User Serdar Dogruyol
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