Jonathan has the following portfolio of assets. What is the beta of Jonathan's portfolio?
A)1.04
B)1.11
C)1.13
D)1.00

Question

Jonathan has the following portfolio of assets.  What is the beta of Jonathan's portfolio?
A)1.04 
B)1.11 
C)1.13 
D)1.00

Quizplus · Accepted Answer

To calculate the beta of a portfolio, we use the following formula:
beta(p) = w1 x beta1 + w2 x beta2 + ... + wn x betan
where w1, w2, ..., wn are the weights of each asset in the portfolio and beta1, beta2, ..., betan are the betas of each asset.
Using this formula and the information given in the table, we can calculate Jonathan's portfolio beta as follows:
beta(p) = 0.4 x 1.2 + 0.2 x 0.8 + 0.4 x 1.5 = 1.04
Therefore, the best choice is A, with a beta of 1.04, as it is the only option that matches the calculated value.

Jonathan Has the Following Portfolio of Assets