$\begin{array}{lrcc}
& \text { Amount invested } & \text { Expected return } & \text { Beta } \
\text { Stock X } & \$ 30,000 & 16 \% & 1.35 \
\text { Stock Y } & \$ 45,000 & 13 \% & 1.10 \
\text { Stock Z } & \$ 25,000 & 10 \% & 0.85
\end{array}$

-What is the beta of the portfolio?
A) 1.06
B) 1.11
C) 0.98
D) 1.27
E) 1.19

Question

$\begin{array}{lrcc} 
& \text { Amount invested } & \text { Expected return } & \text { Beta } \
\text { Stock X } & \$ 30,000 & 16 \% & 1.35 \
\text { Stock Y } & \$ 45,000 & 13 \% & 1.10 \
\text { Stock Z } & \$ 25,000 & 10 \% & 0.85
\end{array}$

-What is the beta of the portfolio?
A) 1.06
B) 1.11
C) 0.98
D) 1.27
E) 1.19

Quizplus · Accepted Answer

The portfolio beta is calculated as a weighted average of the individual betas, using the proportion of the total investment in each stock as weights. The total investment is $100,000. The portfolio beta is: $(30,000/100,000) \times 1.35 + (45,000/100,000) \times 1.10 + (25,000/100,000) \times 0.85 = 1.11$.

-What Is the Beta of the Portfolio? A) 1

-What Is the Beta of the Portfolio?
A) 1