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You own a stock portfolio invested 40 percent in Stock Q, 25 percent in Stock R, 20 percent in Stock S, and 15 percent in Stock T. The betas for these four stocks are .93, 1.10, 1.10, and 1.28, respectively. What is the portfolio beta? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Respuesta :

Answer:

the portfolio beta is 1.06

Explanation:

The computation of the portfolio beta is shown below:

The Beta of the Portfolio is

= Stock Q Weight × Beta of Stock Q + Stock R Weight  × Beta of Stock R + Stock S Weight × Beta of Stock S + Stock T Weight × Beta of Stock T

= 0.93 × 0.4 + 1.1 × 0.25 + 1.1 × 0.2 + 1.28 × 0.15

= 1.06

hence, the portfolio beta is 1.06

We simply applied the above formula so that the correct value could come

And, the same is to be considered

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