The beta of a portfolio is
A) the sum of the betas of all assets in the portfolio.
B) irrelevant, only the betas of the individual assets are important.
C) does not change over time.
D) is the weighted average of the betas of the individual assets in the portfolio.

Question

Quizplus · Accepted Answer

The beta of a portfolio is the weighted average of the betas of the individual assets in the portfolio. Therefore, option D is the correct choice. Option A is incorrect as simple addition of individual betas does not give proper weighting to each asset. Option B is incorrect as the beta of the portfolio is important in determining the overall risk and expected return of the portfolio. Option C is incorrect as changes in the composition of the portfolio will result in changes in the beta of the portfolio.

The Beta of a Portfolio Is