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:

Decentralized Decision Making

A process in which decision-making authority is distributed throughout an organization rather than being centralized in a single point of authority.

Upward Communication

The process of information flow from the lower levels of a hierarchy to the higher levels within an organization.

Peer-to-peer

A network model where each participant (or node) acts as both a client and a server, sharing resources and services directly without the need for central coordination.

Social Presence

A measure of how much an individual feels socially connected and present in a digital or virtual environment.