You own a stock portfolio invested 20% in Stock Q, 20% in Stock R, 10% in Stock S, and 50% in...

Question:

You own a stock portfolio invested 20% in Stock Q, 20% in Stock R, 10% in Stock S, and 50% in Stock T. The betas for these four stocks are 1.46, 1.44, 1.28, and 1.66, respectively.

What is the portfolio beta?

A.) 1.61

B.) 1.51

C.) 1.46

D.) 1.54

E.) 1.57

Portfolio Beta:

The beta of a portfolio is the weighted average of the beta of the assets in the portfolio. The relevant weight for each assets is the market value of the asset, relative to the overall market value of the portfolio.

Answer and Explanation:

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Using the Systematic Risk Principle & Portfolio Beta

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Chapter 12 / Lesson 3
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In this lesson, we'll discuss how investors must understand the systematic risk principle in their portfolio. We'll also explain how investors can measure and define the risk of their portfolios using betas.


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