You have a $50,000 portfolio consisting of intel, ge, and con edison. you put $20,000 in intel, $12,000 in ge, and the rest in c

Question

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You have a $50,000 portfolio consisting of intel, ge, and con edison. you put $20,000 in intel, $12,000 in ge, and the rest in c

on edison. intel, ge, and con edison have betas of 1.3, 1, and .8, respectively. what is your portfolio beta? question 24 options:

Business

1 answer:

DanielleElmas [232] · Answer 1 · 2023-03-29T13:41:59+03:00

The calculation of portfolio beta is done by simply multiplying the percentage of each portfolio with each beta and summing up all the products afterwards.

For intel:
= ($20,000/$50,000)(1.3) = 0.52

For GE:
= ($12,000/$50,000)(1) = 0.24

For Con Edison:
Portfolio of Con Edison = $50,000 - ($20,000 + $12,000) = $18,000
= ($18,000/$50,000)(0.8) = 0.288

The portfolio beta is:
 PB = 0.52 + 0.24 + 0.288 = 1.048

ANSWER: 1.048