Joel owns the following portfolio of securities. What is the beta for the portfolio?
Company Beta Percent of Portfolio
Exxon-Mobil .95 40%
Pacific Industries 1.20 35%
Payson Restaurants 1.35 25%
A) 0.9500
B) 1.0000
C) 1.1375
D) 1.1705
Answer: C
Explanation: C) βp = Σ βi ∗ wi = .95 ∗ 40% + 1.20 ∗ 35% + 1.35 ∗ 25% = 1.14.
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