your portfolio consists of 3 stocks. the chart below shows the dollar value of each stock in your portfolio what is the beta of your portfolio?

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22-11-2022
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your portfolio consists of 3 stocks. the chart below shows the dollar value of each stock in your portfolio what is the beta of your portfolio?

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shomerajeshwari90 shomerajeshwari90 · Answer 1 · 2022-11-25T11:45:11+01:00

The portfolio of beta will be 1.44 considering the weights of all stock and their value of beta.

Given information:

Weight of stock A =8,041/23,440 = 0.34304

Weight of stock B = 7,267/23,440=0.310025

Weight of stock C= 8,132/23,440 = 0.3469

Beta of stock A, B &c are 0.51,1.66 and 2.18 respectively

Portfolio beta = weight of stock A*Beta of A+ Weight of stock B*Beta of B +Weight of stock c*Beta of C

Portfolio beta= 0.34304*0.51+0.310025*1.66+0.3469*2.18= 1.445

An individual, a financial institution, or an investing firm may hold a portfolio, which is a combination of capital instruments and investment tools. Understanding a portfolio's foundations as well as the factors that affect it is crucial for building a profitable portfolio.

According to the definition of a portfolio, this is an assortment of different assets that investors own. The above group of financial assets could also include valuable items like gold, equities, funds, derivatives, real estate, cash equivalents, securities, etc.