You have a portfolio that has equal amounts invested in the following common stocks. What is...
You have a portfolio that has equal amounts invested in the following common stocks. What is the beta of the portfolio?
Security Beta
Bank of America 1.96
CA Technologies 1.44
Toyota Motor Corporation 0.75
International Business Machines 0.62
Options: 1.05, 1.00, 1.10, 1.19
Homework Answers
Beta of a portfolio is the aweighted Average of the Securities.
Weight of each security is 0.25 OR 25%
Beta of the POrtfolio is = Beta of Bank of America * Weight of Bank of America + Beta of CA Technologies * Weight of CA Technologies + Beta of Toyota Corporattion * Weight of Toyota Corporattion + Beta of International Business Machines * Weight of International Business Machines
Beta of the POrtfolio is = 1.96 * 0.25 + 1.44 * 0.25 + 0.75 * 0.25 + 0.62 * 0.25
= 1.1925
Option D is correct.
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