You own $10,000 of Olympic Steel stock that has a beta of 2.2. You also own $7,000 of Rent-a-Center (beta = 1.5) and $8,000 of Lincoln Educational (beta = 0.5).
What is the beta of your portfolio?
Ans 1.46
Stock | BETA | Investment | BETA * Investment |
Olympic Steel | 2.20 | 10000.00 | 22000.00 |
Rent-a-Center | 1.50 | 7000.00 | 10500.00 |
Lincoln Educational | 0.50 | 8000.00 | 4000.00 |
Total | 25000.00 | 36500.00 | |
Average Beta = | (Beta* investment) / Total Investment | ||
36500 / 25000 | |||
1.46 |
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