You own 18869 of Olympic steel stock that has a beta of 282

You own $18,869 of Olympic steel stock that has a beta of 2.82 you also own $21,924 of rent a center beta=1.84 and 20,097 of Lincoln educational beta 0.85

Solution

Portfolio beta is the weighted average of the beta of the individual securities, the weights being the proportion of total amount invested in each security. The beta of the portfolio is calculated below: Security Investment Amount Weight in portofolio Beta Wt. Beta Olympic Steel 18869 0.3099 2.82 0.87 Rent a Center 21924 0.3601 1.84 0.66 Lincoln Educational 20097 0.3301 0.85 0.28 60890 1.0000 1.82 Portfolio Beta = 1.82