What is the beta of a portfolio comprised of the following securities?
$\begin{array} { | l | l | l | }
\hline \text { Share } & \text { Amount Invested } & \text { Security Beta } \
\hline \mathrm { A } & € 2,000 & 1.20 \
\hline \mathrm { B } & € 3,000 & 1.46 \
\hline \mathrm { C } & € 5,000 & .72 \
\hline
\end{array}$
A)1.008
B)1.014
C)1.038
D)1.067
E)1.127

Question

What is the beta of a portfolio comprised of the following securities?
$\begin{array} { | l | l | l | } 
\hline \text { Share } & \text { Amount Invested } & \text { Security Beta } \
\hline \mathrm { A } & € 2,000 & 1.20 \
\hline \mathrm { B } & € 3,000 & 1.46 \
\hline \mathrm { C } & € 5,000 & .72 \
\hline
\end{array}$
A)1.008
B)1.014
C)1.038
D)1.067
E)1.127

Quizplus · Accepted Answer

The beta of a portfolio is the weighted average of the betas of its components. Calculate the portfolio beta as follows: $$ \text{Portfolio Beta} = \frac{(€2,000 \times 1.20) + (€3,000 \times 1.46) + (€5,000 \times .72)}{€2,000 + €3,000 + €5,000} = \frac{(2,400) + (4,380) + (3,600)}{10,000} = \frac{10,380}{10,000} = 1.038. $$

What Is the Beta of a Portfolio Comprised of the Following