Beta

[alpha668]

Any further comment to my above message ?

[S2000magician]

@alpha668

Thank you for your responses!

You’re welcome.

@alpha668

I am still confused by following issues.

We’ll try to fix that.

@alpha668

Why a portfolio (say, a portfolio comprising only stocks of banking industry) has a beta of 1.2 (just for discussion) or an individual stock (say, Dell Computer) has a beta of 1.6 (just for discussion), rather than 1? Do these mean that there are some specific (non-systematic) risks inherent in the portfolio or the stock, relatively to S&P 500 which has a beta of 1?

Yes.

@alpha668

For the portfolio comprising only stocks of banking industry, are the specific (non-systematic) risks those risks inherent in the banking industry?

Yes.

@alpha668

For Dell Computer, are the specific (non-systematic) risks those risks inherent in Dell Computer itself as well as those risks inherent in the computer industry?

Those inherent in Dell, which will include (most of the) risks inherent in the computer industry, plus those unique to Dell.

@alpha668

Is it that a portfolio of USD 1 billion and comprises all 500 stocks (market-value weighted) in S&P 500 shall have a beta of 1?

Yes.

@alpha668

Your advices will be appreciated!

My pleasure.

[alpha668]

s2000magician,

Again, thank you so much !

[S2000magician]

@alpha668

S2000magician,

Again, thank you so much!

Again, my pleasure.