Question

You own a stock portfolio invested 25 percent in Stock Q, 35 percent in Stock R, 35 percent in Stock S, and 5 percent in Stock T. The betas for these four stocks are 1.6, 0.5, 1.7, and 0.8, respectively. What is the portfolio beta

Answer 1

1.57

Step-by-step explanation:

The computation of portfolio beta is shown below:-

Stock Stock % Beta(%) Weighted Beta (%)

Q 0.25 1.6 0.4

R 0.35 0.5 0.175

S 0.35 1.7 0.595

T 0.5 0.8 0.4

Total 1.57

To Reach the weighted beta we simply multiply the stock percentage with beta.