Lauren has the following portfolio of assets. $$\begin{array}{l}
\text { Proportion of }\
\begin{array} { l c c }
\text { Asset } & \text { Portfolio } & \text { Beta } \
\hline \text { A } & 20 \% & 1.60 \
\text { B } & 35 \% & 1.05 \
\text { C } & 45 \% & 0.85
\end{array}
\end{array}$$ What is the beta of Lauren's portfolio?
A) 1.07
B) 1.16
C) 1.05
D) 1.00

Question

Lauren has the following portfolio of assets. $$\begin{array}{l}
\text { Proportion of }\
\begin{array} { l c c } 
\text { Asset } & \text { Portfolio } & \text { Beta } \
\hline \text { A } & 20 \% & 1.60 \
\text { B } & 35 \% & 1.05 \
\text { C } & 45 \% & 0.85
\end{array}
\end{array}$$ What is the beta of Lauren's portfolio?
A) 1.07
B) 1.16
C) 1.05
D) 1.00

Quizplus · Accepted Answer

The beta of a portfolio is the weighted average of the betas of the individual assets in the portfolio, where the weights are the proportions of the portfolio invested in each asset. In this case, the beta of Lauren's portfolio is:(0.20 x 1.60) + (0.35 x 1.05) + (0.45 x 0.85) = 1.07

Lauren Has the Following Portfolio of Assets What Is the Beta of Lauren's Portfolio? A) 1

Lauren Has the Following Portfolio of Assets What Is the Beta of Lauren's Portfolio?
A) 1