Kelly Brown has $12,000 invested in American Cyanamid, $15,000 in Gannett Company, and $3,000 in Texas International. If American Cyanamid has a beta of 1.05, Gannett a beta of .85, and Texas International a beta of 1.30, what is Kelly's portfolio beta?

Question

Quizplus · Accepted Answer

Kelly's portfolio beta is calculated by taking the weighted average of the betas of the individual investments. The weights are based on the proportion of the total investment in each stock. The calculation is: (12,000/30,000)*1.05 + (15,000/30,000)*0.85 + (3,000/30,000)*1.30 = 0.975.

Kelly Brown Has $12,000 Invested in American Cyanamid, $15,000 in Gannett