Question

1) Choose five stocks—any five stocks you find interesting. List the company, the ticker symbol, and the percentage of your total portfolio that this stock makes up. 2) Find and report the beta for each of the stocks in your portfolio. Discuss what the beta of each stock means for that company. 3) Calculate the portfolio beta and discuss what it means. Based on the betas of each stock, which stocks might you choose to invest more heavily in and why?

Answer 1

1-	compant	Ticker	% of Investment	Beta
	Infosys	INFY	0.2	0.85
	The Home depot Inc	HD	0.15	1.22
	Amazon	AMZN	0.25	1.71
	Apple Inc	AAPL	0.3	0.91
	Facebook Inc.	FB	0.1	1.2
2-	compant	beta
	Infosys	0.85	beta of Infosys depicts that a return of security would little be less than market return, if market return will change by 1 then return of stock will change by .85 only
	The Home depot Inc	1.22	Beta of The home depot is 1.22 which indicates that if market return will change by 1% then stock return will change by 1.22%
	Amazon	1.71	beta of Amazon is 1.71 which indicates that stock return has more volatality than market, if market return will change by 1% then stock return will change by 1.71%
	Apple Inc	0.91	Apple Inc stock beta is .91 which indicates that if market return will change by 1% stock returns will change by .91%
	Facebook Inc.	1.2	Facbook Inc stock beta is 1.2 which indicates that if the market return will change by 1% then stock return will change by 1.2%
3-	compant	Ticker	% of Investment	Beta	weight*beta	weight*beta
	Infosys	INFY	0.2	0.85	.2*.85	0.17
	The Home depot Inc	HD	0.15	1.22	.15*1.22	0.183
	Amazon	AMZN	0.15	1.71	.15*1.71	0.2565
	Apple Inc	AAPL	0.3	0.91	.3*.91	0.273
	Facebook Inc.	FB	0.2	1.2	.2*1.2	0.24
	beta of portfolio = sum of weight*beta					1.1225
	This portfolio beta is 1.12 which indicates that return of the portfolio will change by 1.12% if the market return will change by 1%. Portfolio beta is 1.12 which is more than market beta of 1 it means portfolio is more volatile than market
	As investment objective is to earn heavy profit from short term trading soI would prefer to invest in stock of Amazon because its beta is 1.71 which indicates a high volatality so by Investing into Amazon stock i can earn return more than the market return even though high risk is attached with it.