You own a stock portfolio invested 20 percent in Stock Q, 20 percent in Stock R,
ID: 2767260 • Letter: Y
Question
You own a stock portfolio invested 20 percent in Stock Q, 20 percent in Stock R, 35 percent in Stock S, and 25 percent in Stock T. The betas for these four stocks are 1.2, 0.4, 1.3, and 0.8, respectively. What is the portfolio beta? (Round your answer to 3 decimal places.
You own a stock portfolio invested 20 percent in Stock Q, 20 percent in Stock R, 35 percent in Stock S, and 25 percent in Stock T. The betas for these four stocks are 1.2, 0.4, 1.3, and 0.8, respectively. What is the portfolio beta? (Round your answer to 3 decimal places.
Explanation / Answer
Calculation of the beta of the portfolio Beta = 1.2*20%+.4*20%+1.3*35%+.8*25% .24+.08+.455+.2 0.975 The portfolio Beta is .975