Question

You own a stock portfolio invested 30 percent in Stock Q. 20 percent in Stock R, 30 percent in Stock S, and 20 percent in Stock T. The betas for these four stocks are.89, 122, 106, and 124, respectively. What is the portfolio beta? (Do not round Intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.) Portfolio beta

Answer 1

The beta of the individual stocks in a portfolio can be weighted average.

Beta of portfolio = B(q) * W(q) + B(r) * W(r) + B(s) * W(s) + B(t) * W(t)

Where B is beta and W is the weight of the stock.

So B(portfolio) = .89*30% + 1.22*20% + 1.06*30% + 1.24*20% = 1.077

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