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Homework answers / question archive / The beta of four stocks—?G, ?H, I, and J—are 0
The beta of four
stocks—?G,
?H, I, and
J—are 0.42?, 0.88?,1.19?,
and 1.52?,
respectively. What is the beta of a portfolio with the following weights in each? asset:
|
Weight in Stock G |
Weight in Stock H |
Weight in Stock I |
Weight in Stock J |
|||||
|
Portfolio 1 |
?25% |
?25% |
?25% |
?25% |
||||
|
Portfolio 2 |
?30% |
?40% |
?20% |
?10% |
||||
|
Portfolio 3 |
?10% |
?20% |
?40% |
?30% |
||||
What is the beta of portfolio? 1?
Beta of the portfolio the the sum of weigjted beta of each stock.
Beta = (0.25*0.42) + (0.25 * 0.88) + ( 0.25 * 1.19) + (0.25* 1.52)
= 0.105 + 0.22 + 0.2975 + 0.38
= 1.0025
