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23 January, 14:10

You have a $50,000 portfolio consisting of Intel, GE, and Con Edison. You put $20,000 in Intel, $12,000 in GE, and the rest in Con Edison. Intel, GE, and Con Edison have betas of 1.3, 1, and. 8, respectively. What is your portfolio beta?

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  1. 23 January, 14:32
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    Answer: 1.048

    Explanation:

    First let us calculate the amount in Con Edison

    = 50,000 - 20,000 - 12,000

    = $18,000

    To calculate the Portfolio Beta, you take the sum of the respective betas of the various stocks in the portfolio multiplied by their proportion in the portfolio.

    Intel = 20,000/50,000

    = 2/5

    GE = 12,000/50,000

    = 6/25

    Con Edison = 18,000/50,000

    = 9/25

    Adding them up we will have

    = (1.3*2/5) + (1*6/25) + (0.8*9/25)

    = 1.048

    If you need any clarification do react or comment.
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Home » Business » You have a $50,000 portfolio consisting of Intel, GE, and Con Edison. You put $20,000 in Intel, $12,000 in GE, and the rest in Con Edison. Intel, GE, and Con Edison have betas of 1.3, 1, and. 8, respectively. What is your portfolio beta?
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