Question

the beta of stock a, stock b, stock C are 1.6, 1.2, and 0.8 respectively if you invest 50% of stock a 25% of Stock B and stock C what is a beta of your investment

Answer 1

Answer:

1.30

Explanation:

Beta of Investment = Beta of Stock A* Weightage of Stock A + Beta of Stock B* Weightage of Stock B + Beta of Stock C* Weightage of Stock C

Stock   Beta (A)   Weightage (B)  Beta of Investment (A*B)

A              1.6             0.50                      0.80

B              1.2             0.25                      0.30

C              0.8            0.25                     0.20

Total                                                       1.30

So, the beta of the investment is 1.30