You are considering a portfolio of three stocks with 30% of your money invested in company X, 45% of your money invested in company Y, and 25% of your money invested in company Z. If the betas for each stock are 1.22 for company X, 1.46 for company Y, and 1.03 for company Z, what is the portfolio beta?

1.2805

Explanation:

Data provided in the question:

Company Money invested Beta Money Invested * Beta

X 30% = 0.3 1.22 0.366

Y 45% = 0.45 1.46 0.657

X 25% = 0.25 1.03 0.2575

Now,

The beta of the profile is given as:

Beta profile = ∑ (Money invested * Beta)

or

Beta profile = 0.366 + 0.657 + 0.2575

or

Beta profile = 1.2805