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?
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:
See full answer below.
Become a member and unlock all Study Answers
Try it risk-free for 30 daysTry it risk-free
Ask a question
Our experts can answer your tough homework and study questions.Ask a question Ask a question
Learn more about this topic:
fromChapter 12 / Lesson 3
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.