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    Computing and Controlling the Portfolio Beta

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    Mrs. Ochede has 20,000 naira saved from work, she intends to invest in shares. Ochede's friend has approached you for assistance. The data provided is as follows,

    Company                           Beta

    A                                         0.8

    B                                         0.9

    C                                         1.08

    D                                         1.3

    a) calculate Beta of the portfolio of A,C, D if she invests 4,000 naira in each company .

    b) Amount to be invested in B to obtain weighted Beta of less than 1 after making investments in a above.

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    https://brainmass.com/business/beta-and-required-return-of-a-project/computing-controlling-portfolio-beta-623437

    Solution Preview

    Please see the attached Excel 97-2003 worksheet.

    Mrs. Ochede has 20,000 naira saved from work, she intends to invest in shares. Ochede's friend has approached you for assistance. The data provided is as follows,

    Company                           Beta

    A                                         ...

    Solution Summary

    This solution illustrates how to compute a portfolio's beta given the betas of its component stocks. It also illustrates how to choose additional securities to control the portfolio beta through selective investing.

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