The Beta of an Active Portfolio Is 1

question 29

Multiple Choice

The beta of an active portfolio is 1.20. The standard deviation of the returns on the market index is 20%. The nonsystematic variance of the active portfolio is 1%. The standard deviation of the returns on the active portfolio is

• A) 3.84%.
• B) 5.84%.
• C) 19.60%.
• D) 24.17%.
• E) 26.0%.

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Definitions:

Quantity Sold

The total number of units of a product or service sold during a specific period.

Market Forces

Natural economic factors that influence supply, demand, and prices within a marketplace, shaping business dynamics.

Prices

The amount of money required to purchase goods or services, typically determined by factors such as demand, supply, and production cost.

Demand Curve

A graph showing the relationship between the price of a product and the quantity of the product that consumers are willing and able to purchase at that price.