Megan Ross holds the following portfolio: $$\begin{array} { c r r }
\text { Stock } & \text { Investment } & \text { Beta } \
\text { A } & \$ 150,000 & 1.40 \
\text { B } & 50,000 & 0.80 \
\text { C } & 100,000 & 1.00 \
\text { D } & 75,000 & 1.20 \
\text { Total } & \$ 375,000 &
\end{array}$$ What is the portfolio's beta?
A) 1.06
B) 1.17
C) 1.29
D) 1.42
E) 1.56

Question

Megan Ross holds the following portfolio: $$\begin{array} { c r r } 
\text { Stock } & \text { Investment } & \text { Beta } \
\text { A } & \$ 150,000 & 1.40 \
\text { B } & 50,000 & 0.80 \
\text { C } & 100,000 & 1.00 \
\text { D } & 75,000 & 1.20 \
\text { Total } & \$ 375,000 &
\end{array}$$ What is the portfolio's beta?
A) 1.06
B) 1.17
C) 1.29
D) 1.42
E) 1.56

Quizplus · Accepted Answer

The portfolio's beta is calculated by taking the weighted average of the betas of the individual investments. The calculation is as follows: $$ \text{Portfolio Beta} = \left( \frac{150,000}{375,000} \times 1.40 \right) + \left( \frac{50,000}{375,000} \times 0.80 \right) + \left( \frac{100,000}{375,000} \times 1.00 \right) + \left( \frac{75,000}{375,000} \times 1.20 \right) = 1.17 $$

Megan Ross Holds the Following Portfolio What Is the Portfolio's Beta? A) 1

Megan Ross Holds the Following Portfolio What Is the Portfolio's Beta?
A) 1