In: Finance
Suppose Beximco Group has equally distributed its investment in three company. The first company have a Beta of 1.4, the second company have a beta of 1.9 and the third company have a beta of 1.4. What will be the portfolio beta? Round up to two decimal point and just write the portfolio beta number in your answer
Answer : Portfolio Beta = (Beta of 1st company * Weight of 1st company) + (Beta of 2nd company * Weight of 2 nd company) + (Beta of 3rd company * Weight of 3rd company)
= [1.4 * (1 / 3)] + [1.9 * (1 / 3)] + [1.4 * (1 / 3)]
= 1.57