Determine the beta of a portfolio consisting of the following common stocks. $\begin{array}{lll}\text { Security}&\text { Market Value}&\text {Beta }\
\text { Glaxo } & \$ 2,600 & 1.24 \
\text { SCANA } & 3,700 & .88 \
\text { BancOne } & 2,900 & .95 \
\text { Pepsi } & 3,400 & 1.05 \
\text { AFLAC } & 3,000 & 1.09 \
\text { Votec } & 4,400 & 1.41
\end{array}$
A) 1.00
B) 1.12
C) 1.09
D) 1.11

Question

Quizplus · Accepted Answer

The portfolio beta is calculated by taking the weighted average of the individual stock betas, where the weights are the proportion of each stock's market value to the total market value of the portfolio. The total market value is $20,000. The weighted beta is: (2600/20000)*1.24 + (3700/20000)*0.88 + (2900/20000)*0.95 + (3400/20000)*1.05 + (3000/20000)*1.09 + (4400/20000)*1.41 = 1.11.

Determine the Beta of a Portfolio Consisting of the Following