Peter Lynch has the following portfolio of investments: $$\begin{array} { | c | c | c | }
\hline \text { Stock } & \text { Investment } & \text { Beta } \
\hline \text { A } & \$ 21 \text { million } & 0.945 \
\hline \text { B } & \$ 42 \text { million } & 1.47 \
\hline \text { C } & \$ 11 \text { million } & 2.10 \
\hline \text { D } & \$ 32 \text { million } & 1.26 \
\hline
\end{array}$$ What is the beta of Peter's portfolio?
A)1.000
B)1.126
C)1.366
D)1.534
E)1.877

Question

Peter Lynch has the following portfolio of investments: $$\begin{array} { | c | c | c | } 
\hline \text { Stock } & \text { Investment } & \text { Beta } \
\hline \text { A } & \$ 21 \text { million } & 0.945 \
\hline \text { B } & \$ 42 \text { million } & 1.47 \
\hline \text { C } & \$ 11 \text { million } & 2.10 \
\hline \text { D } & \$ 32 \text { million } & 1.26 \
\hline
\end{array}$$ What is the beta of Peter's portfolio?
A)1.000
B)1.126
C)1.366
D)1.534
E)1.877

Quizplus · Accepted Answer

The portfolio beta is calculated as a weighted average of the individual betas. The total investment is $106 million. The portfolio beta is: (21/106)*0.945 + (42/106)*1.47 + (11/106)*2.10 + (32/106)*1.26 = 1.366.

Peter Lynch Has the Following Portfolio of Investments What Is the Beta of Peter's Portfolio? A)1

Peter Lynch Has the Following Portfolio of Investments What Is the Beta of Peter's Portfolio?
A)1