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?

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