ou own a stock portfolio invested 20 percent in Stock Q, 20 percent in Stock R, 20 percent in Stock S, and 40 percent in Stock T. The betas for these four stocks are 0.7, 1.28, 0.57, and 1.36, respectively. What is the portfolio beta? |
Multiple Choice
1.08
1.03
1.05
1
1.11
C. 1.05
The beta of a portfolio is the sum of the weight of each asset times the beta of each asset. So, the beta of the portfolio is:
βp = 0.20(0.7) + 0.20(1.28) + 0.20(0.57) + 0.40(1.36)
βp = 1.05
ou own a stock portfolio invested 20 percent in Stock Q, 20 percent in Stock R,...
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