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

question 72

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 0.18 and σ_M was 0.22, the β of the portfolio would be approximately

• A) 0.82.
• B) 0.56.
• C) 0.07.
• D) 1.03.

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Definitions:

Biologically Predisposed

The inherent inclination or natural tendency towards certain behaviors, characteristics, or conditions, influenced by genetic or biological factors.

Life Expectancy

A statistical measurement of the average time an organism is expected to live, based on the year of their birth, their current age, and other demographic factors.

Lifespan

The duration of time from birth to death in the life of an organism, during which it undergoes various stages of development and aging.

Disability Rates

Disability rates indicate the proportion of a population that experiences disability, encompassing various types of physical, mental, or developmental conditions.