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Beta of a portfolio. The beta of four stocks --P, ​Q, R, and S --are 0.44​,...

Beta of a portfolio.

The beta of four stocks --P, ​Q, R, and S --are 0.44​, 0.73​, 1.24​, and 1.31​, respectively. What is the beta of a portfolio with the following weights in each​ asset​?

Weight in Stock P   Weight in Stock Q   Weight in Stock R   Weight in Stock S
Portfolio 1   25% 25% 25% 25%
Portfolio 2   30% 40% 20% 10%
Portfolio 3   10% 20% 40% 30%

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Answer #1

Portfolio 1 Beta is 0.930

Stock Weight × beta Portfolio beta
P 25% 0.44     0.1100
Q 25% 0.73     0.1825
R 25% 1.24     0.3100
S 25% 1.31     0.3275
Portfolio beta 0.930

Portfolio 2 beta is 0.803

Stock Weight × beta Portfolio beta
P 30% 0.44     0.1320
Q 40% 0.73     0.2920
R 20% 1.24     0.2480
S 10% 1.31     0.1310
Portfolio beta 0.803

Portfolio 3 beta is 1.079

Stock Weight × beta Portfolio beta
P 10% 0.44     0.0440
Q 20% 0.73     0.1460
R 40% 1.24     0.4960
S 30% 1.31     0.3930
Portfolio beta 1.079

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