The beta of a portfolio can be calculated as:
A)A sum of the betas of the stocks in the portfolio.
B)The weighted sum of the betas in the portfolio.
C)The average of the betas in the portfolios.
D)The weighted sum of the betas plus the correlation between betas.

Question

Quizplus · Accepted Answer

The beta of a portfolio is a weighted sum of the betas of the individual securities in the portfolio. This is because each security has a different level of risk and impact on the overall portfolio. So, the beta of the portfolio is calculated as the weighted average of the betas of the individual securities, where the weights are the proportions of each security in the portfolio.

The Beta of a Portfolio Can Be Calculated As