Calculating Beta of Portfolio after Portfolio Change

Capital Asset Pricing Model
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Capital Asset Pricing Model > Best Practices > Calculating Beta of Portfolio after Portfolio Change

Calculating Beta of Portfolio after Portfolio Change
Charles Raphael
Please help me to solve this question: You have $2 million portfolio consisting of a $100,000 investment in each of 20 different stock. The portfolio has a beta equal to 1.1. You are considering selling $100,000 worth of one stock which has a beta equal to 0.9 and using the proceeds buy another stock which has beta equal to 1.4. What will be the new beta of your portfolio following this transaction? (...) Read more? Sign up for free

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  I Would Calculate the Weighted Average Beta of the Portfolio
Ramon, Consultant, Spain, Member
  I calculate the weighted average and obtain a new beta of 1.1250.

  CAPM of Changed Portfolio
santosh, Teacher, Nepal, Member
  Please calculate the weighted beta of remaining 19 stocks using 19/20 as their weight and 1/20 as the weight of stock to be removed.
Use as equation: 19/20*b +1/20*0.9 = 1.1. Determine the value of b which is the weighted beta of 19 stocks.
Then again calculate the weighted beta of 20 stocks portfolio as 19/20*b +1/20*1.4.

  Portfolio Beta
abdollah, Student (Other), Iran, Member
  (...)

   
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Capital Asset Pricing Model
Summary
Forum
🔥How to Use CAPM for Project Analysis?
Question - CAPM and Beta
CAPM is Irrelevant to Use
Best Practices
🥇Can Beta of a Stock be 0? And can Beta be Negative?
🥈Application of Capital Asset Pricing Model in Pakistan
🥉Raw Beta vs Adjusted Beta
Calculating Beta of Portfolio after Portfolio Change
CAPM usage by Fund Managers
Why Sharp Increase in the Calculation for Betas
Are US Treasury Bills still Zero Beta?
Calculating Company Beta
CAPM Model and Calculating the Inflation Rate?
Concept of Marginality and CAPM
What is Beta? Explanation and a Few Remarks


Capital Asset Pricing Model
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