You have invested in a portfolio of four stocks:
-Refer to the information above. Calculate the beta of the portfolio.

Question

You have invested in a portfolio of four stocks: 
-Refer to the information above. Calculate the beta of the portfolio.

Quizplus · Accepted Answer

Since the betas of the four stocks are given, we can calculate the weighted average beta of the portfolio as follows:
Beta of portfolio = (Weight of stock 1 x Beta of stock 1) + (Weight of stock 2 x Beta of stock 2) + (Weight of stock 3 x Beta of stock 3) + (Weight of stock 4 x Beta of stock 4)
= (0.25 x 0.8) + (0.2 x 1.2) + (0.35 x 1.1) + (0.2 x 0.6)
= 0.972
Therefore, the answer is B.

You Have Invested in a Portfolio of Four Stocks