Sam has a portfolio with 5 stocks. He has 5000 in google, 6000 in amazon, 7000 in GE, 8000 in walmart, and 14000 in Tesla. The beta of these stocks are 1.4, 1.1, 0.9, 0.8, and 2.4. What is the porfolio beta?
Sam has a portfolio with 5 stocks. He has 5000 in google, 6000 in amazon, 7000 in GE, 8000 in walmart, and 14000 in Tesla. The beta of these stocks are 1.4, 1.1, 0.9, 0.8, and 2.4. What is the porfolio beta?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Sam has a portfolio with 5 stocks. He has 5000 in google, 6000 in amazon, 7000 in GE, 8000 in walmart, and 14000 in Tesla. The beta of these stocks are 1.4, 1.1, 0.9, 0.8, and 2.4. What is the porfolio beta?
Expert Solution
Step 1
Beta of portfolio is weighted average beta of all stock
Beta of portfolio =w1 B1+w2 B2+w3 B3 + w4 B4 + w5 B5
w=weight of stock
B=Beta of stock
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