You hold the positions in the following table. What is the beta of your portfolio? $$\begin{array} { | l | c | c | c | }
\hline & \text { Price } & \text { Shares } & \text { Beta } \
\hline \text { TechNo Comp } & \$ 15.25 & 2000 & 4.0 \
\hline \text { Delivery Corp } & \$ 105.00 & 500 & 1.4 \
\hline \text { Computer Corp } & \$ 35.40 & 300 & 0.9 \
\hline \text { Food Corp } & \$ 18.75 & 200 & - 0.7 \
\hline
\end{array}$$
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? $$\begin{array} { | l | c | c | c | } 
\hline & \text { Price } & \text { Shares } & \text { Beta } \
\hline \text { TechNo Comp } & \$ 15.25 & 2000 & 4.0 \
\hline \text { Delivery Corp } & \$ 105.00 & 500 & 1.4 \
\hline \text { Computer Corp } & \$ 35.40 & 300 & 0.9 \
\hline \text { Food Corp } & \$ 18.75 & 200 & - 0.7 \
\hline
\end{array}$$
A)1.4
B)2.08
C)2.13
D)5.6

Quizplus · Accepted Answer

To find the portfolio beta, we need to find the weighted average of each individual beta. The weight is calculated by dividing the market value of each investment by the total market value of the portfolio.

Total market value of the portfolio = (15.25 * 2000) + (105 * 500) + (35.40 * 300) + (18.75 * 200) = $88,700

Weight(TechNo Comp) = (15.25 * 2000) / $88,700 = 0.344
Weight(Delivery Corp) = (105 * 500) / $88,700 = 0.593
Weight(Computer Corp) = (35.40 * 300) / $88,700 = 0.091
Weight(Food Corp) = (18.75 * 200) / $88,700 = 0.032

Portfolio beta = (4.0 * 0.344) + (1.4 * 0.593) + (0.9 * 0.091) + (-0.7 * 0.032) = 1.8372 ≈ 2.08

Therefore, the answer is B) 2.08.

You Hold the Positions in the Following Table A)14 B)2

You Hold the Positions in the Following Table A)14
B)2