n NISM Certifications
X NISM Series X
Medium

Securities A, B, C, and D have betas of 1.5, 2, 1.75, and 0.9 respectively. A portfolio contains these securities with weights 20%, 30%, 15%, and 35%. What is the beta of this portfolio?

Practice question from NISM Series XA- Investment Adviser (Level 1) Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. 1.48

    Correct answer

  2. B

    1.5

  3. C

    1.9

  4. D

    1.75

Why this is the answer

The beta of a portfolio is the weighted average of individual security betas, calculated as (0.2*1.5) + (0.3*2) + (0.15*1.75) + (0.35*0.9) = 1.48.

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