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What is the beta of a portfolio consisting of 1 share of each of the following stocks given their re

# What is the beta of a portfolio consisting of 1 share of each of the following stocks given their re

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What is the beta of a portfolio consisting of 1 share of each of the following stocks given their respective prices and beta coefficients? Stock Price Beta Number stocks Investment in Stock A \$10 1.4 1 \$10 x 1.4 = \$14.00 B \$24 0.8 1 \$24 x .08 = \$19.20 C \$41 1.3 1 \$41 x 1.3 = \$53.30 D \$19 1.8 1 \$19 x 1.8 = \$34.20 Total \$94 / \$120.7 = 1.28 Portfolio beta How would the portfolio beta differ if (a) the investor purchased 200 shares of stock B and C for every 100 shares of A and D Stock Price Beta Number stocks Investment in Stock A \$10 1.4 100 \$1,000 x 1.4 = \$1,400
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Unformatted text preview: B \$24 0.8 200 \$4,800 x .08 = \$3,840 C \$41 1.3 200 \$8,200 x 1.3 = \$10,660 D \$19 1.8 100 \$1,900 x 1.8 = \$3,420 Total \$15,900 / \$19,320 = 1.22 Portfolio beta (b) equal dollar amounts were invested in each stock? Stock Price Beta Number stocks Investment in Stock A \$10 / 1.4 100 \$1,000 x 1.4 = \$1,400 B \$24 / 0.8 41.67 \$1,000 x .08 = \$800 C \$41 / 1.3 24.39 \$1,000 x 1.3 = \$1,300 D \$19 / 1.8 52.63 \$1,000 x 1.8 = \$1,800 Total \$4,000 / \$5300 = 1.33 Portfolio beta...
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