MAFA/SFM
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
02 December 2010
Security Weightage Beta Portfolio Beta
A 0.50 0.80 .50*.80
B 0.25 1.25 .25*1.25
C 0.25 0.95 .25*.95
My query is y are using weighted avg for each security can any one xplain backgroud behind using weighted avg for portfolio beta pls experts
A 0.50 0.80 .50*.80
B 0.25 1.25 .25*1.25
C 0.25 0.95 .25*.95
My query is y are using weighted avg for each security can any one xplain backgroud behind using weighted avg for portfolio beta pls experts
03 December 2010
Hi.., in simple terms, Beta is considered as a factor representing change in the return of security directly related to change in the market... For example, if B=0.7%., that means, wid every 1% change in market (whether up or down), return on security too will change in same direction by 0.7%...... A portfolio consists various securities, that means, portfolio return is consisted of such individual security returns... Now, equal wieghts cannot b allotted as amount invested in each security is different.., on such investments based, weights r allotted.... Thus, while calculating portfolio beta, we calculate weighted average to avoid miscalculations....
03 December 2010
Lets take an example.., in figures u gave, as per weightage avverage, we get portfolio beta as 0.95.... But if v dnt take weightage avg., rather we consider as simple average, we get portfolio beta as 1, which is not correct..... I wud suggest u to take practical example of investing rs 2000 in A, 1000 in B and 1000 in C.... An solve this problem by both methods, i.e simple average and weightage average....
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is Aadhar PAN linking required for opening bank account?
- Applicability
- Where to show the RCM on Rent paid to unregistered landlord
- CPC Processing IT Return for AY 2023-24 without recognizing the Taxation Option under New Regime
- Application of 115BAC
- Gst Sales of FY 2023-24
- GSTR-3B - Do I file nil when there is no sale but I've bought raw materials
- TDS NUMBER SURRENDER
- Legal heir raised refund , but refund issued to the closed account of deceased.
- RCM - commercial rent paid to URP under GST
- Whether still royalty
- 20% OF DEMAND PAYMENT IN APPEAL
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
- Query for dubts
- Regarding Resignation by Auditor from Pvt. Ltd.
Trending Online Classes
-
Excel Mastery Program
CA Rishabh Pugalia
CAclubindia
