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Given the following information, calculate the beta for the portfolio of stocks A, B, and C....

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Finance

Given the following information, calculate the beta for theportfolio of stocks A, B, and C. (Answer to the nearest tenth).Amount Stock Invested Beta Stock A $7,000 1.2 Stock B $1,000 1.3Stock C $4,000 0.5

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Information provided:

Amount invested in stock A= $7,000

Amount invested in stock B= $1,000

Amount invested in stock C= $4,000

Beta of stock A= 1.2

Beta of stock B= 1.3

Beta of stock C= 0.5

Total portfolio value= $7,000 + $1,000 + $4,000

                                       = $12,000

Weight of stock A= $7,000/ $12,000

                                  = 0.5833*100

                                  = 58.33%

Weight of stock B= $1,000/ $12,000

                                  = 0.0833*100

                                  = 8.33%

Weight of stock C= $4,000/ $12,000

                                  = 0.3333*100

                                  = 33.33%

Portfolio Beta= 0.5833*1.2 + 0.0833*1.3 + 0.3333*0.5

                         = 0.70 + 0.1083 + 0.16667

                         = 0.9750.

In case of any query, kindly comment on the solution.
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Transcribed Image Text

Given the following information, calculate the beta for theportfolio of stocks A, B, and C. (Answer to the nearest tenth).Amount Stock Invested Beta Stock A $7,000 1.2 Stock B $1,000 1.3Stock C $4,000 0.5

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