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In: Finance

You own a stock portfolio invested 30 percent in stock Q, 20 percent in stock R,...

You own a stock portfolio invested 30 percent in stock Q, 20 percent in stock R, 35 percent in stock S, and 15 percent in stock T. The bestas for these four stocks are .85 1.18, 1.02, and 1.20, respectively. what is the portfolio beta?

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Expert Solution

Ans 1.03

Stock Probability (i) BETA(ii) PROBABILITY* RETURN (i)* (ii)
Q 30.00%                     0.85                                                0.26
R 20.00%                     1.18                                                0.24
S 35.00%                     1.02                                                0.36
T 15.00%                     1.20                                                0.18
Total                                                1.03

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