Suppose You Held a Well-Diversified Portfolio with a Very Large

question 35

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 σ of your portfolio was 0.22 and σ_M was 0.17, the β of the portfolio would be approximately

• A) 1.34.
• B) 1.29.
• C) 1.25.
• D) 1.56.

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Definitions:

Bipolar Disorder

A mental health condition characterized by significant mood swings, including manic episodes of high energy and depressive episodes of low mood.

Mood Disorder

A mental health classification that includes conditions affecting mood regulation, such as depression or bipolar disorder.

Type II Bipolar Disorder

A form of bipolar disorder characterized by periods of depression and at least one episode of hypomania.

Schizophrenia

A psychiatric disorder characterized by disruptions in thought processes, perceptions, emotional responsiveness, and social interactions.