Portfolio betas for an industry are usually higher than the average betas of individual stocks in that same industry.

Question

Quizplus · Accepted Answer

Portfolio betas are typically a weighted average of the individual stock betas within the portfolio, not inherently higher than the average betas of the individual stocks in the industry. Diversification within a portfolio can also reduce its overall beta compared to individual stock betas.

Portfolio Betas for an Industry Are Usually Higher Than the Average