Determine the beta of a portfolio consisting of the following common stocks: $$\begin{array} { l l l }
\text { Security } & \text { Market Value } & \text { Beta } \
\text { Boeing } & \$ 5,000 & 1.2 \
\text { Exxon } & \$ 4,000 & 0.8 \
\text { Duke Power } & \$ 2,500 & 0.6 \
\text { Blockbuster Video } & \$ 2,000 & 1.4 \
\text { Coca-Cola } & \$ 7,500 & 1.0
\end{array}$$
A) 0.93
B) 0.85
C) 1.00
D) 1.14

Question

Determine the beta of a portfolio consisting of the following common stocks: $$\begin{array} { l l l } 
\text { Security } & \text { Market Value } & \text { Beta } \
\text { Boeing } & \$ 5,000 & 1.2 \
\text { Exxon } & \$ 4,000 & 0.8 \
\text { Duke Power } & \$ 2,500 & 0.6 \
\text { Blockbuster Video } & \$ 2,000 & 1.4 \
\text { Coca-Cola } & \$ 7,500 & 1.0
\end{array}$$
A) 0.93
B) 0.85
C) 1.00
D) 1.14

Quizplus · Accepted Answer

The portfolio beta is calculated as the weighted average of the individual stock betas. The total market value is $21,000. The portfolio beta is: (5000/21000)*1.2 + (4000/21000)*0.8 + (2500/21000)*0.6 + (2000/21000)*1.4 + (7500/21000)*1.0 = 1.00.

Determine the Beta of a Portfolio Consisting of the Following