You hold the following portfolio, consisting of Assets A, B and C. What is the portfolio beta? $$\begin{array} { | c | c | c | c | }
\hline \text { Asset } & \text { Return } & \text { Beta } & \begin{array} { c }
\text { Portfolio } \
\text { Weight }
\end{array} \
\hline \text { A } & 10 \% & 0.75 & 0.20 \
\hline \text { B } & 12 \% & 1.00 & 0.40 \
\hline \text { C } & 14 \% & 1.25 & 0.40 \
\hline
\end{array}$$
A)0.75
B)1.00
C)1.05
D)1.15
E)1.25

Question

You hold the following portfolio, consisting of Assets A, B and C. What is the portfolio beta? $$\begin{array} { | c | c | c | c | } 
\hline \text { Asset } & \text { Return } & \text { Beta } & \begin{array} { c } 
\text { Portfolio } \
\text { Weight }
\end{array} \
\hline \text { A } & 10 \% & 0.75 & 0.20 \
\hline \text { B } & 12 \% & 1.00 & 0.40 \
\hline \text { C } & 14 \% & 1.25 & 0.40 \
\hline
\end{array}$$
A)0.75
B)1.00
C)1.05
D)1.15
E)1.25

Quizplus · Accepted Answer

The portfolio beta is calculated as the weighted sum of the individual asset betas: (0.20 * 0.75) + (0.40 * 1.00) + (0.40 * 1.25) = 0.15 + 0.40 + 0.50 = 1.05.

You Hold the Following Portfolio, Consisting of Assets A, B