Richard owns the following portfolio of securities. What is the beta f
Richard owns the following portfolio of securities. What is the beta for the portfolio?
Company Beta Percent of Portfolio
Apple 2.50 25%
Wells Fargo 0.65 50%
eBay 1.70 25%
A) 1.00
B) 0.65
C) 1.62
D) 1.38
ANSWER
Answer: D
Explanation: D) βp = Σ βi ∗ wi = 2.5 ∗ 25% + .65 ∗ 50% + 1.70 ∗ 25% = 1.38.
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