You Own $1,000 of City Steel Stock That Has a Beta

question 36

Multiple Choice

You own $1,000 of City Steel stock that has a beta of 1.5. You also own $5,000 of Rent-N-Co (beta = 1.8) and $4,000 of Lincoln Corporation (beta = 0.9) . What is the beta of your portfolio?

• A) 1.4
• B) 1.5
• C) 4.2
• D) 4.65

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Definitions:

Variances

The differences between planned or expected financial outcomes and the actual financial outcomes.

Fixed Overhead

The portion of overhead costs that remains constant regardless of the level of production or business activity.

Direct Labor

The labor costs directly tied to the production of goods or services, such as wages paid to employees who physically produce a product.

Raw Material

Fundamental components and elements employed at the beginning of the manufacturing or production process.