Question

The total value of your portfolio is $60,000 and the portfolio has three stocks, A, B...

The total value of your portfolio is $60,000 and the portfolio has three stocks, A, B and C, with betas of 1, 1.3 and .8, respectively. And, you have invested in $16,000, $24,000 on stocks A and B, and the rest on C. What would be the beta of your portfolio?

Multiple Choice

  • 1.369

  • 1.053

  • 0.991

  • 0.810

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Answer #1

pORTFOLIO bETA = Weighted Avg Beta of securities in that portfolio.

Security Beta Investment Weight Wtd Beta
A          1.00 $ 16,000.00     0.2667        0.267
B          1.30 $ 24,000.00     0.4000        0.520
C          0.80 $ 20,000.00     0.3333        0.267
Portfolio Beta        1.053

OPtion B is correct

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