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:

Proposed Project

An outlined plan or proposal for a future project, often including objectives, methodologies, and potential impacts.

Net Present Value

The disparity between the current value of cash coming in and the current value of cash going out over a time frame, utilized in capital budgeting to evaluate an investment's profitability.

Annual Benefit

The total benefit, usually measured in monetary terms, that is expected to be received annually.

Aircraft

Vehicles capable of atmospheric flight due to interaction with the air, such as airplanes or helicopters.