Question

Calculate a Beta for the following portfolio. Please show formulas so I can learn how to complete these. Thanks!

Beta	$ Invested
1.8	$80,000
1.5	$120,000
0.8	$30,000
0.0	$50,000
0.91	$100,000

Answer 1

Value of the portfolio = $80,000 + $120,000 + $30,000 + $50,000 + $100,000

  = $380,000

Weight of $80,000 = $80,000 / $380,000 = 0.2105

Weight of $120,000 = $120,000 / $380,000 = 0.3158

Weight of $30,000 = $30,000 / $380,000 = 0.0789

Weight of $50,000 = $50,000 / $380,000 = 0.1316

Weight of $100,000 = $100,000 / $380,000 = 0.2632

Beta of the portfolio = 0.2105*1.8 + 0.3158*1.5 + 0.0789*0.8 + 0.1316*0.0 + 0.2632*0.91

= 0.3789 + 0.4737 + 0.0631 + 0 + 0.2395

= 1.1552 1.16.