Answer:
Portfolio beta is 0.97
Explanation:
Portfolio bet is the average beta calculated on the basis of weightage of each investment. The beta of every investment is multiplied with the weightage of each investment in a portfolio. The all the value is added to get the portfolio beta
Stock Beta Share Rate Value Weightage
A 0.8 500 $60 $24,000 $24,000/$89,00 = 0.27
B 1.2 500 $85 $42,500 $42,500/$89,00 = 0.48
C 0.7 900 $25 $22,500 $24,000/$89,00 = 0.25
Total $89,000
Portfolio Beta = ( Stock A beta x Stock A Weightage) + ( Stock B beta x Stock B Weightage) + ( Stock C beta x Stock C Weightage)
Portfolio Beta = ( 0.8 x 0.27 ) + ( 1.2 x 0.48 ) + ( 0.7 x 0.25 ) = 0.216 + 0.576 + 0.175 = 0.967
Portfolio beta is 0.97
