Question
In: Finance
Given the following information, calculate the beta for the portfolio of stocks A, B, and C....
Given the following information, calculate the beta for the portfolio of stocks A, B, and C. (Answer to the nearest tenth). Amount Stock Invested Beta Stock A $7,000 1.2 Stock B $1,000 1.3 Stock C $4,000 0.5
Solutions
Expert Solution
Information provided:
Amount invested in stock A= $7,000
Amount invested in stock B= $1,000
Amount invested in stock C= $4,000
Beta of stock A= 1.2
Beta of stock B= 1.3
Beta of stock C= 0.5
Total portfolio value= $7,000 + $1,000 + $4,000
= $12,000
Weight of stock A= $7,000/ $12,000
= 0.5833*100
= 58.33%
Weight of stock B= $1,000/ $12,000
= 0.0833*100
= 8.33%
Weight of stock C= $4,000/ $12,000
= 0.3333*100
= 33.33%
Portfolio Beta= 0.5833*1.2 + 0.0833*1.3 + 0.3333*0.5
= 0.70 + 0.1083 + 0.16667
= 0.9750.
In case of any query, kindly comment on the solution.
jeff jeffy answered 1 year agoRelated Solutions
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