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5 May, 09:13

18) You have a portfolio made up of three stocks - - Stock A makes up 40%, stock B is 15%, and stock C is 45%. Stock A has a beta of 1.16, stock B's beta is 1.47 and stock C 's beta is. 42. What is the beta of your portfolio?

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  1. 5 May, 09:23
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    0.8735

    Explanation:

    Data provided in the question:

    Stock Weight Beta

    A 40% 1.16

    B 15% 1.47

    A 45% 0.42

    Now,

    The Portfolio beta = ∑ (Stock beta * Stock investment weights)

    Therefore,

    The Portfolio beta = (0.4 * 1.16) + (0.15 * 1.47) + (0.45 * 0.42)

    or

    The Portfolio beta = 0.464 + 0.2205 + 0.189

    or

    The Portfolio beta = 0.8735
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