ANSWER KEY
6. Beta is a measure of:
b) the systematic risk for a security or a portfolio relative to a
market portfolio.
7. What is the portfolio beta?
c) 1.09
| Security | Amount Invested | Weigh | Expected Return | Beta Coefficient | Weight x Beta Coefficient |
| Stock A | $5,000 | 0.25 | 9% | 0.80 | 0.20 |
| Stock B | $5,000 | 0.25 | 10% | 1.00 | 0.25 |
| Stock C | $6,000 | 0.30 | 11% | 1.20 | 0.36 |
| Stock D | $4,000 | 0.20 | 12% | 1.40 | 0.28 |
| - | - | - | - | Portfolio Beta Coefficient = | 1.09 |
SYMBOLS AND DEFINITIONS
Let's take a few moments to review some symbols and definitions and to introduce some new ones. You will have a better understanding of their meaning and use as you complete the final section of this unit, "Risk vs. Return".
The continuation/full version of this article read on site www.history-society.com - Basics of Corporate Finance