You hold a portfolio with the following securities: Percent
Security of Portfolio Beta Return
X Corporation 20% 1.35 14%
Y Corporation 35% .95 10%
Z Corporation 45% .75 8%
Compute the expected return and beta for the portfolio.
A) 10.67%, 1.02
B) 9.9%, 1.02
C) 34.4%, .94
D) 9.9%, .94

Question

Quizplus · Accepted Answer

The expected return is calculated as a weighted average of the returns: (0.20*14%) + (0.35*10%) + (0.45*8%) = 9.9%. The portfolio beta is also a weighted average: (0.20*1.35) + (0.35*0.95) + (0.45*0.75) = 0.94.

You Hold a Portfolio with the Following Securities: Percent