Question

What is the beta of a portfolio comprised of the following securities? Stock Amount Invested Security Beta A $ 4,000 1.44 B $ 5,000 1.55 C $ 7,500 1.00

Answer 1

Answer: 1.27

Step-by-step explanation:

The portfolio beta is a weighted average of the individual betas of the composite stocks.

Total amount invested = 4,000 + 5,000 + 7,500

= $16,500

Portfolio beta = (4,000/16,500 * 1.44) + (5,000/16,500 * 1.55) + (7,500/16,500 * 1.00)

= 0.3490909 + 0.469697 + 0.45454545

= ‭1.27333335‬

= 1.27