Portfolio Beta You own $1,000 of City Steel stock that has a beta of 1.5.You also own $5,000 of Rent-N-Co (beta = 1.8)and $4,000 of Lincoln Corporation (beta = 0.9).What is the beta of your portfolio?
A)1.4
B)1.5
C)4.2
D)4.65

Question

Quizplus · Accepted Answer

The portfolio beta is calculated as the weighted average of the individual betas. The weights are the proportion of the total investment in each stock. The portfolio beta is (1000/10000)*1.5 + (5000/10000)*1.8 + (4000/10000)*0.9 = 1.4.

Portfolio Beta You Own $1,000 of City Steel Stock That