A portfolio comprises Coke (beta of 1.2)and Wal-Mart (beta of 0.9).The amount invested in Coke is $20,000 and in Wal-Mart is $30,000.What is the beta of the portfolio?

Question

Quizplus · Accepted Answer

The portfolio beta is calculated as the weighted average of the individual betas. The weights are based on the proportion of the total investment in each stock. The portfolio beta = (20,000/50,000)*1.2 + (30,000/50,000)*0.9 = 0.48 + 0.54 = 1.02.

A Portfolio Comprises Coke (Beta of 1