You own a stock portfolio invested 25 percent in Stock Q 25

You own a stock portfolio invested 25 percent in Stock Q, 25 percent in Stock R, 10 percent in Stock S, and 40 percent in Stock T. The betas for these four stocks are 1.04, 0.48,1.73, and 0.98, respectively. What is A0) the portfolio beta? O 0.96 0.9 ? 0.93 0.99 O 0.95

Solution

Portfolio beta=Respective betas*Respective investment weights

=(0.25*1.04)+(0.25*0.48)+(0.1*1.73)+(0.4*0.98)

which is equal to

=0.95(Approx).