Megan Ross holds the following portfolio: $$\begin{array} { c r r }
\text { Stock } & \text { Investment } & \text { Beta } \
\hline \text { A } & \$ 150,000 & 1.40 \
\text { B } & 50,000 & 0.80 \
\text { C } & 100,000 & 1.00 \
\text { D } & 75,000 & 1.20 \
\text { Total } & \underline{\$ 375,000} &
\end{array}$$ What is the portfolio's beta?
A)1.06
B)1.17
C)1.29
D)1.42
E)1.56

Question

Megan Ross holds the following portfolio: $$\begin{array} { c r r } 
\text { Stock } & \text { Investment } & \text { Beta } \
\hline \text { A } & \$ 150,000 & 1.40 \
\text { B } & 50,000 & 0.80 \
\text { C } & 100,000 & 1.00 \
\text { D } & 75,000 & 1.20 \
\text { Total } & \underline{\$ 375,000} &
\end{array}$$ What is the portfolio's beta?
A)1.06
B)1.17
C)1.29
D)1.42
E)1.56

Quizplus · Accepted Answer

The portfolio's beta is calculated by taking the weighted average of the betas of the individual stocks. The weights are the proportion of the total investment in each stock. The calculation is: $(150,000/375,000) \times 1.40 + (50,000/375,000) \times 0.80 + (100,000/375,000) \times 1.00 + (75,000/375,000) \times 1.20 = 1.17$.

Megan Ross Holds the Following Portfolio What Is the Portfolio's Beta? A)1

Megan Ross Holds the Following Portfolio What Is the Portfolio's Beta?
A)1