Answer:
1.05
Explanation:
Simply multiply the percentage of a particular stock holding with its respective beta factor and likewise the value of the other stocks to calculate the weighted average beta factor of the portfolio.
Mathematically:
Portfolio Beta = (P1 * B1) + (P2 * B2) + (P3 * B3) + (P4 * B4).............+ (Pn * Bn)
Here
P is the percentage holding of a particular stock and is 30, 25, 35 and 20 percent of stock q,r,s and t respectively.
B is the beta factors of the stock which is 0.76, 1.14, 1.15 and 1.32 of the stock q,r,s and t respectively.
By putting the values, we have:
Portfolio Beta = (30% * 0.76) + (25% * 1.14) + (35% * 1.15) + (10% * 1.32)
= 1.0475 which is approximately 1.05.
