- 400 shares of Wal-Mart stores, currently at 76.01 a share with a Beta of .36 -

Question

- 400 shares of Wal-Mart stores, currently at 76.01 a share with a Beta of .36

- 300 shares of Caterpillar Inc, currently at $99.39 a share and a Beta of 1.58

- 200 shares of MetLife currently at 52.56 a share and a beta of 2.10 and

- 100 shares of Apple, currently at 53.86 a share with a Beta of .97

Define Beta, and calculate the Beta for the Portfolio. Describe whether you feel that this is a diversified portfolio. Explain why you would personally find this to be either a safe or risky portfolio to have.

Explanation / Answer

value of company = no of shares * price

walmart = 30428

Caterpillar Inc =29817

MetLife = 10512

Apple = 5386

Total = 76143

Weightage W

W1 = 0.3996

W2 = 0.3915

W3 = 0.138

W4 = 0.07

beta portfolio = weightage * beta = 1.120

it is risk becuase beta is greater than 1 and when beta is greater than 1 then it's risk is greater than market risk

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