Question

You own a stock portfolio invested 35 percent in Stock Q, 30 percent in Stock R, 20 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are .92, 1.25, 1.09, and 1.27, respectively. What is the portfolio beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Answer 1

Answer:

The Portfolio Beta is 1.11

Explanation:

In the given question we have weight of stock Q,R,S and T with the beta of four stocks given at the 0.92, 0.125, 1.09 and 1.27 and weight at 35%, 30%, 20%, and 15%. Through multiplying the Weights with beta we get the value of weighted beta of individual stock and adding weighted beta of individual stock gives the value of weighted beta of portfolio at the level of 1.11