The portfolio beta (βₚ) is the weighted average of the betas of the individual stocks in the portfolio. It is calculated using the formula:

$\beta_p = w_Q \beta_Q + w_R \beta_R + w_S \beta_S + w_T \beta_T$

where:

• $w_Q = 0.15$, $\beta_Q = 0.79$
• $w_R = 0.20$, $\beta_R = 1.23$
• $w_S = 0.30$, $\beta_S = 1.13$
• $w_T = 0.35$, $\beta_T = 1.36$

Substituting the values:

$\beta_p = (0.15 \times 0.79) + (0.20 \times 1.23) + (0.30 \times 1.13) + (0.35 \times 1.36)$

$\beta_p = 0.1185 + 0.246 + 0.339 + 0.476$

$\beta_p = 1.1795$

Final Answer:

$\beta_p \approx 1.18$

This means the portfolio has a beta of 1.18, indicating it is slightly more volatile than the overall market (which has a beta of 1).

Would you like more details or explanations?

Related Questions:

1. How does portfolio beta impact risk and return?
2. What does a beta of 1.18 imply for expected returns?
3. How can you adjust a portfolio’s beta to reduce risk?
4. What are some ways to estimate stock betas?
5. How do market conditions affect stock beta values?

Tip:

If you want to reduce risk, consider adding low-beta stocks to the portfolio to bring the overall beta closer to 1 or below.