You own a stock portfolio invested 30% in a film company,20% in a bank stock,10% in a mining company,and 40% in an oil company.The betas of these four stocks are 1.4,0.6,1.5,and 1.8 respectively.What is the portfolio beta?

Question

Quizplus · Accepted Answer

Take the weighted average of the individual betas to find the portfolio beta. β_p = w₁β₁ + . . . + w_nβ_n β_p = (0.30 × 1.4) + (0.20 × 0.6) + (0.10 × 1.5) + (0.40 × 1.8) β_p = 0.42 + 0.12 + 0.15 + 0.72 = 1.41

You Own a Stock Portfolio Invested 30% in a Film