Purchase Solution

Calculating the Portfolio Beta in the given case

Not what you're looking for?

Ask Custom Question

A stock portfolio invested 35% in Stock Q, 25% in Stock R, 30% in Stock S, and 10% in Stock T. The betas for these 4 stocks are .84, 1.17, 1.11 and 1.36 respectively. What is the portfolio beta?

Please show work in Excel.

Purchase this Solution
Solution Summary

Solution depicts the steps to calculate the portfolio beta in the given case. Calculations are carried out with the help of suitable built-in functions in MS Excel.

Solution provided by:
Lokesh Jain, MSc
Education
  • BEng (Hons) , Birla Institute of Technology and Science, India
  • MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
  • "Thank you"
  • "Really great step by step solution"
  • "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
  • "Thanks Again! This is totally a great service!"
  • "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Marketing Research and Forecasting

The following quiz will assess your ability to identify steps in the marketing research process. Understanding this information will provide fundamental knowledge related to marketing research.

Six Sigma for Process Improvement

A high level understanding of Six Sigma and what it is all about. This just gives you a glimpse of Six Sigma which entails more in-depth knowledge of processes and techniques.

Transformational Leadership

This quiz covers the topic of transformational leadership. Specifically, this quiz covers the theories proposed by James MacGregor Burns and Bernard Bass. Students familiar with transformational leadership should easily be able to answer the questions detailed below.

Situational Leadership

This quiz will help you better understand Situational Leadership and its theories.

View More Free Quizzes
Related BrainMass Solutions

  • Financial Performance Metrics: Detailed Spreadsheet

    (CAPM), given the portfolio's beta and the average market return.

  • Calculating expected rate of return

    The following solution describes the steps for calculating expected rate of return on given stocks. It also calculates expected return from a portfolio consisting of these stocks. Step by step calculations are given for each problem.

  • Portfolio and Stock Beta

    The CFO of your firm asks you to precisely explain the methodology that you have used in both part a) and part b) above. Please do this. d. Determine the expected return on stock E using the same market parameters given in part b).

  • Calculating the risk premium and expected return

    In equilibrium required rate of return is equal to expected return. So, r=rf+b*rp 11.2%=4%+b*8% 11.2%-4%=b*8% 7.2%=b*8% b=7.2%/8%=0.90 The solution describes the steps to calculate risk premium and expected return in the given case.

  • Calculating cost of equity and expected rate of return

    It also explains the steps in calculating beta and expected rate of return of a portfolio.

  • Calculate the market portfolio's standard deviation

    Let's assume the variance of market return is Vm Then the Beta of each security can be calculated by Beta = Cov(S, M) / Vm And the combined beta of the market portfolio = SUM (Beta*Weight) So the combined Variance(Portfolio, Market) = SUM (Beta

  • Question about portfolio variance relationships

    So they only need compensation for systematic risk measured in terms of β. The market portfolio is defined to have a beta of 1. so, the extra return provided by the market over and above, i.e.

  • Calculating Investments and Stocks

    What is the beta of the portfolio? b. You have decided to sell Boeing for $16,000 and use the proceeds to buy $16,000 of Raytheon stock with a beta of 1.5. After the transaction is complete, what will be the new beta of the portfolio?

  • calculating beta

    Hence, given a risk free rate of 4%, an expected portfolio return of 12% and a beta of 1.50, then the expected return on the stock is 4%+1.50*(12%-4%)=16%.

View More Related Solutions