You own a stock portfolio invested 15 percent in Stock Q, 15 percent in Stock R,
ID: 2751484 • Letter: Y
Question
You own a stock portfolio invested 15 percent in Stock Q, 15 percent in Stock R, 20 percent in Stock S, and 50 percent in Stock T. The betas for these four stocks are 1.43, 0.87, 1.15, and 0.71, respectively. What is the portfolio beta?
A)0.98
B)0.91
C)0.95
D)0.88
E)0.93
You own a stock portfolio invested 15 percent in Stock Q, 15 percent in Stock R, 20 percent in Stock S, and 50 percent in Stock T. The betas for these four stocks are 1.43, 0.87, 1.15, and 0.71, respectively. What is the portfolio beta?
Explanation / Answer
The correct answer is E) 0.93
Stock Weights Beta Weighted average Beta Q 0.15 1.43 0.2145 R 0.15 0.87 0.1305 S 0.20 1.15 0.23 T 0.50 0.71 0.355 Portfolio beta 0.93