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

question 33

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

• A) 0.64.
• B) 1.33.
• C) 1.25.
• D) 1.56.

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Definitions:

Modeling

The process of observing and imitating specific behaviors from others as a form of learning.

Naturalistic Observation

A type of correlational study in which some naturally occurring behavior is observed without intervention in the situation.

Behavior

The way in which an organism acts or conducts itself, especially in response to its environment.

Evolutionary Perspective

The evolutionary perspective examines how the process of evolution has shaped the behavior, structure, and functions of living organisms.