Suppose You Held a Well-Diversified Portfolio with a Very Large $\sigma$

question 52

Multiple Choice

Suppose you held a well-diversified portfolio with a very large number of securities, and that the single index model holds.If the $\sigma$ of your portfolio was 0.22 and $\sigma$ _M was 0.19, the $\beta$ of the portfolio would be approximately

• A)1.34.
• B)1.16.
• C)1.25.
• D)1.56.

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Definitions:

Homogeneous Teams

Groups whose members have similar backgrounds, skills, experiences, and perspectives, which can foster unity but limit diversity and creativity.

Informal Groups

Informal groups are unofficial and emerge to serve special interests.

Personal Relationships

Bonds or connections formed between individuals based on factors like friendship, kinship, shared interests, or emotional ties.

Social Demands

Expectations or pressures from society that influence behavior, roles, and social interactions.