Megan Ross holds the following portfolio: 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: What is the portfolio's beta?

A) 1.06 
B) 1.17 
C) 1.29 
D) 1.42 
E) 1.56

Quizplus · Accepted Answer

To calculate the portfolio's beta, we need to take the weighted average of the betas of the individual stocks in the portfolio. Using the given weights and betas, we have:

Portfolio beta = (0.25 x 1.5) + (0.35 x 0.8) + (0.4 x 1.6) = 1.09

Therefore, the best choice is B) 1.17, which is the closest option to 1.09.

Megan Ross Holds the Following Portfolio: What Is the Portfolio's