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John invested the following amounts in three stocks: Security Investment Beta Stock A 1.20 $562,900 $748.170 Stock B 1.54 Sto

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Answer #1

First we need to give weights to the stocks.

total investment = 562900+748170+361712 = $ 1672782

WEIGHTS

stock A = 562900/ 1672782 = 33.65 %

stock B = 748170 / 1672782 = 44.72 %

stock C = 361712 / 1672782 = 21.62 %

portfolio beta = weights of stock* respective beta

portfolio beta = 33.65% * 1.20 + 44.72% * 1.54 + 21.62% * 2.03 = 0.4038 + 0.6887 + 0. 4389 = 1.5314

portfolio beta= 1.5314

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