Question

In: Finance

Stock % of Portfolio Beta Expected Return Walmart 20 1.00 16% Borders 30 0.85 14% Hasbro...

Stock % of Portfolio Beta Expected Return
Walmart 20 1.00 16%
Borders 30 0.85 14%
Hasbro 15 1.2 20%
Five Below 25 .6 12%
Outback 10 1.6 24%

What is the portfolio beta?

Solutions

Expert Solution

Beta of portfolio is weighted average of the beta of components within the portfolio.

Beta = w1 * Beta1 + w2 * Beta2 + w3 * Beta3 + w4 * Beta4 + w5 * Beta5

Beta = 20% * 1 + 30% * 0.85 + 15% * 1.2 + 25% * 0.6 + 10% * 1.6

Beta = 0.2 + 0.255 + 0.18 + 0.15 + 0.16

Beta = 0.945

Beta = 0.95


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