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11 June, 20:15

You own a stock portfolio invested 25 percent in Stock Q, 20 percent in Stock R, 20 percent in Stock S, and 35 percent in Stock T. The betas for these four stocks are 0.69, 1.76, 1.61, and 1.02, respectively. What is the portfolio beta

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  1. 11 June, 23:29
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    The portfolio beta is 1.2

    Explanation:

    Portfolio Beta is the average bet of the all investments in portfolio. This beta is calculated on the basis of weightage of each investment in the portfolio.

    Portfolio Beta = (Beta of Stock Q x Weightage of Stock Q) + (Beta of Stock R x Weightage of Stock R) + (Beta of Stock S x Weightage of Stock S) + (Beta of Stock T x Weightage of Stock T)

    Portfolio Beta = (0.69 x 25%) + (1.76 x 20%) + (1.61 x 20%) + (1.02 x 35%)

    Portfolio Beta = 0.1725 + 0.352 + 0.322 + 0.357 = 1.2035
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