If, on Average, a 1% Increase in the Market Portfolio

question 48

Multiple Choice

If, on average, a 1% increase in the market portfolio leads to an increase of 2% in the value of an asset, then the asset's beta equals

• A)0.5.
• B)1.
• C)2.
• D)Not enough information has been given to determine the asset's beta.

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Definitions:

Common Stockholders

Individuals or entities that own shares of common stock in a company, granting them certain rights like voting on corporate matters.

Corporation

A legal entity recognized by law as separate from its owners, with its own rights, privileges, and liabilities, capable of conducting business, owning assets, and being taxed.

Dollar Terms

Refers to the value of transactions, prices, or economic indicators denominated in the U.S. dollar.

Investment

Disbursing funds with the prospect of accruing income or profits.