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
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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