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18) You have a portfolio made up of three stocks -- Stock A makes up 40%, stock B is 15%, and stock C is 45%. Stock A has a beta of 1.16, stock B’s beta is 1.47 and stock C ‘s beta is .42. What is the beta of your portfolio?

Respuesta :

Answer:

0.8735

Explanation:

Data provided in the question:

Stock               Weight               Beta

  A                    40%                    1.16

  B                    15%                     1.47

  A                    45%                   0.42

 Now,

The Portfolio beta = ∑ (Stock beta × Stock investment weights  )

Therefore,

The Portfolio beta = ( 0.4 × 1.16 ) + ( 0.15 × 1.47 ) + ( 0.45 × 0.42 )

or

The Portfolio beta = 0.464 + 0.2205 + 0.189

or

The Portfolio beta = 0.8735

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