A Portfolio Beta Is a Weighted Average of the Betas

question 22

Essay

A portfolio beta is a weighted average of the betas of the individual securities which comprise the portfolio.However,the standard deviation is not a weighted average of the standard deviations of the individual securities which comprise the portfolio.Explain why this difference exists.

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Definitions:

Employer-Independent Contractor

A working relationship where the contractor provides services under a contract for a specific task, without being entitled to employee benefits or subject to the same control as an employee.

Independent Contractors

Individuals or entities hired to perform specific tasks or services, who maintain control over how their work is completed, rather than employees.

Authorizes

To give official permission or power to someone to do something.

Building Contractors

are professionals involved in the planning, leading, execution, supervision, and inspection of a building construction process.