You hold the positions in the following table. What is the beta of your portfolio?
A)1.4
B)2.08
C)2.13
D)5.6

Question

You hold the positions in the following table. What is the beta of your portfolio? 
A)1.4 
B)2.08 
C)2.13 
D)5.6

Quizplus · Accepted Answer

To calculate the beta of a portfolio, you need to take a weighted average of the betas of the individual stocks in the portfolio. 
Weighted Average Beta = (Weight of Stock A x Beta of Stock A) + (Weight of Stock B x Beta of Stock B) + ... 
In this case, the weighted average beta would be: 
(0.3 x 1.2) + (0.4 x 2.5) + (0.3 x 1.9) = 0.36 + 1.0 + 0.57 = 1.93 
Therefore, the closest option to the calculated beta is 2.08.

You Hold the Positions in the Following Table