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Portfolio Beta. Portfolio beta is a measure of the overall systematic risk of a portfolio of investments. It equals the weighted-average of the beta coefficient of all the individual stocks in a portfolio.
1) Weighted Beta of Intel = Absolute Beta of Intel x Portfolio weight = 0.71 x 20% = 0.142
2) Weighted Beta of GE = Absolute Beta of GE x Portfolio weight = 1.51 x 65% = 0.981
3) Weighted Beta of Con Edison = Absolute Beta of Con Edison x Portfolio weight = 0.36 x 15% = 0.054
Portfolio Beta = Weighted Beta of Intel + Weighted Beta of GE + Weighted Beta of Con Edison = 0.142 + 0.981 + 0.054 = 1.177 which is greater than 1.
A portfolio beta greater than 1 suggests its value fluctuates more than the stock market.
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estion 2 10 points Save Ans Consider the CAPM. The risk-free rate is 1% and the expected return on the market is 13%. What is the expected return on a portfolio with a beta of 0.5? (Put answers in decimal points instead of percentage) Question 2 of 8> A Moving to another question will save this response.
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