Calculating a Portfolio's Beta

Levendis, John; Dicle, Mehmet F.

Calculating a Portfolio's Beta

Journal of Economics and Finance Education, Forthcoming

11 Pages Posted: 2 Oct 2017

See all articles by John Levendis

Mehmet F. Dicle

Loyola University New Orleans - Joseph A. Butt, S.J. College of Business; Research ATA, LLC

Date Written: September 25, 2017

Abstract

We present an active-learning computer exercise where students pick stocks for a portfolio. Using their selection of stocks, two different portfolios are created: 1) a portfolio that never rebalances and 2) a portfolio that continuously rebalances. They then calculate the rates of return and betas for their individual stocks and for their portfolios. The students are then asked to draw conclusions about the benefits of diversification which are shown to apply regardless of the specific type of rebalancing in a diversified portfolio.

Keywords: Portfolio, CAPM, Beta

JEL Classification: G10, G12

Suggested Citation: Suggested Citation

Levendis, John and Dicle, Mehmet F., Calculating a Portfolio's Beta (September 25, 2017). Journal of Economics and Finance Education, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3042996