Question

I have purchased the stocks listed below. My portfolio beta is 1.031. Please answer the following questions:

STOCKS	MARKET VALUE	BETA	WEIGHT	BETA * WEIGHT
TSLA	$       25,099.20	1.64	0.076092	0.124791056
TWTR	$       24,280.83	1.12	0.073611	0.082444423
GOOG	$       23,865.60	1.08	0.072352	0.078140439
SBUX	$       25,363.38	0.79	0.076893	0.060745478
DELL	$       24,890.25	1.36	0.075459	0.102623755
MCD	$       24,772.41	0.68	0.075101	0.051068947
WMT	$       27,137.70	0.29	0.082272	0.023858919
AAPL	$       25,159.68	1.28	0.076275	0.097632591
AMZN	$       26,356.96	1.32	0.079905	0.105474866
NKE	$       25,627.20	0.84	0.077693	0.06526197
FB	$       26,576.62	1.06	0.080571	0.085405403
MSFT	$       24,853.00	0.89	0.075346	0.067057685
DIS	$       25,870.04	1.1	0.078429	0.086271931
SUM	$    329,852.87		1	1.030777463

1.) Based on your portfolio beta, how does your current portfolio tend to react to overall market value changes in general?

2.) If the market goes up or down 10%, how would you expect your portfolio to react, given your portfolio beta? Provide a % return up or down for this last question.  

Answer 1

1.) Based on your portfolio beta, how does your current portfolio tend to react to overall market value changes in general?

The Beta of portfolio is 1.031 which means the beta is positive. Since the beta is positive the portfolio will move in the direction of the Stock market which means when stock market increases the value of portfolio increases and when the stock market decreases then the value of portfolio decreases. Thus Portfolio is directly related to the stock market.

2.) If the market goes up or down 10%, how would you expect your portfolio to react, given your portfolio beta? Provide a % return up or down for this last question.  

as mentioned the portfolio is directly related to stock movements.

if the market goes up by 10%, then the portfolio will increase by 10.31% (beta * market change = 1.031 * 10%)

if the market goes down by 10%, then the portfolio will decrease by 10.31% (beta * market change = 1.031 * -10%)