
Explanation:
The beta (β) of the portfolio is calculated as:
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Q.198 Huma Ahmed is a junior portfolio analyst who has recently switched from the fixed income portfolio management unit to his firm's equity portfolio management unit. On her first day, she was asked by her senior portfolio analyst to compute the portfolio's beta that contains 5 assets. Using the data provided in the table, determine the beta of the portfolio.
| Asset | Return | Weight | Beta |
|---|---|---|---|
| 1 | 1.3% | 0.10 | 0.35 |
| 2 | 10% | 0.25 | 0.20 |
| 3 | 6% | 0.25 | 0.15 |
| 4 | 9% | 0.30 | 0.60 |
| 5 | 16% | 0.10 | 0.40 |
A
1.7
B
0.34
C
0.09
D
-1.1
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