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Jim Angel holds a $200,000 portfolio consisting of the following stocks: Stock Investment Beta A $50,000 1.20 B $50,000 0.80 C $50,000 1.00 D $50,000 1.20 Total $200,000 What is the portfolio's beta

Answer :

Abiolataiwo2015go

Assuming Jim Angel holds a $200,000 portfolio consisting of the following stocks. The portfolio's beta is 1.050.

Portfolio beta

First step

Weight of stock A=50,000/200,000=0.25

Weight of stock B=50,000/200,000=0.25

Weight of stock C=50,000/200,000=0.25

Weight of stock D=50,000/200,000=0.25

Second step

Portfolio beta=Weight ×beta

Stock A =1.20×0.25=0.3

Stock B= 0.80×0.25=0.2

Stock C 1.00×0.25 =0.25

Stock D 1.20×0.25=0.3

Total 1.050

Inconclusion the portfolio's beta is 1.050.

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