You own 400 shares of Stock A at a price of $55 per share, 330 shares of Stock B
ID: 2737479 • Letter: Y
Question
You own 400 shares of Stock A at a price of $55 per share, 330 shares of Stock B at $80 per share, and 600 shares of Stock C at $28 per share. The betas for the stocks are .7, 1.3, and .5, respectively. What is the beta of your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimalplaces.)
You own 400 shares of Stock A at a price of $55 per share, 330 shares of Stock B at $80 per share, and 600 shares of Stock C at $28 per share. The betas for the stocks are .7, 1.3, and .5, respectively. What is the beta of your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimalplaces.)
Explanation / Answer
Beta of the portfolio would be weighted average beta of the Investment.
Amount invested = Price x no. of stocks
Portfolio beta = sum of (Beta x amount invested)/ Total amount invested
Stock
Price
Quantity
Investment
Beta
Investment x Beta
A
55
400
22000
0.7
15400
B
80
330
26400
1.3
34320
C
28
600
16800
0.5
8400
65200
58120
Portfolio Beta = 58120 / 65200
= 0.89
So portfolio beta would be 0.89.
Stock
Price
Quantity
Investment
Beta
Investment x Beta
A
55
400
22000
0.7
15400
B
80
330
26400
1.3
34320
C
28
600
16800
0.5
8400
65200
58120
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