Homework Answers
Answer: Correct answer is 1.053
Portfolio beta=Summation of (Weight of the stock in the
portfolio)*(Beta of the stock)
Total investment =(5000+7500+9000+15000+11500)=48000
Weight of stock A =5000/48000=0.104166667
Beta =0.105263158*0.65=0.0684
Weight of stock B =7500/48000=0.15625
Beta=0.15625*.85=0.1328
Weight of stock C =9000/48000=0.1875
Beta=0.1875*1.25=0.234
Weight of stock D =15000/48000=0.3125
Beta=0.3125*0.89=0.278
Weight of stock E =11500/48000=0.239583333
Beta=0.239583333*1.42=0.3402
=0.0684+0.1328+0.234+0.278+0.3402=1.053
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