All about Capital Asset Pricing Model
Learn from colleagues and experts
Join now. Completely free.
Log in
|
Calculating Beta of Portfolio after Portfolio Change
Charles Raphael, Student (Part Time), Malaysia, Member
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?...
|
|
| |
|
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 equat... |
|
| |
|
Portfolio Beta
abdollah, Student (Other), Iran, Member The beta of your portfolio is: (100'000/2'000'000)*b1+(1/20)b2+...+(1/20) 0.9=1.1
So 1.1=1/20*(b1+b2...+b19)+1/20*.09
B1+b2+..+b19=21.1 ... |
|
|
