What is the beta of a portfolio including 20% of stock A with a beta of...

Question

Question

What is the beta of a portfolio including 20% of stock A with a

beta of 0.90, 35% of stock B with a beta of 1.05, 30% of stock C

with a beta of 1.73, and 15% of cash?

Answer 1

Answer #1

The beta of the portfolio is computed as shown below:

= Beta of stock A x weight of stock A + Beta of stock B x weight of stock B + Beta of stock C x weight of stock C + Beta of cash x weight of cash

= 0.90 x 0.20 + 1.05 x 0.35 + 1.73 x 0.30 + 0 x 0.15

= 1.0665

Feel free to ask in case of any query relating to this question

Answer 2

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