A portfolio contains four assets.Asset 1 has a beta of .8 and composes 20% of the portfolio.Asset 2 has a beta of 1.1 and composes 20% of the portfolio.Asset 3 has a beta of 1.5 and composes 30% of the portfolio.Asset 4 has a beta of 1.6 and composes the remaining 30% of the portfolio.If the riskless rate is expected to be 3% and the market risk premium is 6%,what is the beta of the portfolio?
A)0.80
B)1.10
C)1.19
D)1.25
E)1.31

Question

Quizplus · Accepted Answer

The portfolio beta is calculated as the weighted average of the individual asset betas: (0.8 * 0.2) + (1.1 * 0.2) + (1.5 * 0.3) + (1.6 * 0.3) = 1.31.

A Portfolio Contains Four Assets