Mike Flannery holds the following portfolio: $$\begin{array} { l r r }
\underline { \text { Stock }} & \underline { \text { Investment } } & \underline { \text { Beta } } \
\text { A } & \$ 150,000 & 1.40 \
\text { B } & 50,000 & 0.80 \
\text { C } & 100,000 & 1.00 \
\text { D } &\underline { {75,000 }} & 1.20 \
\text { Total } & \underline { \$375,000 }
\end{array}$$ What is the portfolio's beta?
A) 1.06
B) 1.17
C) 1.29
D) 1.42
E) 1.56

Question

Mike Flannery holds the following portfolio: $$\begin{array} { l r r } 
\underline { \text { Stock }} & \underline { \text { Investment } } & \underline { \text { Beta } } \
 \text { A } & \$ 150,000 & 1.40 \
\text { B } & 50,000 & 0.80 \
\text { C } & 100,000 & 1.00 \
\text { D } &\underline {  {75,000 }}  & 1.20 \
\text { Total } & \underline { \$375,000 }
\end{array}$$ What is the portfolio's beta?
A) 1.06
B) 1.17
C) 1.29
D) 1.42
E) 1.56

Quizplus · Accepted Answer

The portfolio's beta is a weighted average of the betas of the individual stocks, with the weights being the proportions of the portfolio invested in each stock. In this case, the portfolio's beta is:(150,000/375,000) * 1.40 + (50,000/375,000) * 0.80 + (100,000/375,000) * 1.00 + (75,000/375,000) * 1.20 = 1.17

Mike Flannery Holds the Following Portfolio What Is the Portfolio's Beta? A) 1

Mike Flannery Holds the Following Portfolio What Is the Portfolio's Beta?
A) 1