You Own Two Risky Assets, Both of Which Plot on the Security

question 402

Multiple Choice

You own two risky assets, both of which plot on the security market line. Asset A has an expected return of 12% and a beta of 0.8. Asset B has an expected return of 18% and a beta of 1.4. If your portfolio beta is the same as the market portfolio, what proportion of your funds are invested in asset A?

• A) 0.33
• B) 0.50
• C) 0.67
• D) 1.33
• E) 1.67

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Definitions:

Communal Sharing

A type of social relationship or exchange characterized by a sense of community and shared resources without an expectation of reciprocity.

Authority Ranking

A social organization system where individuals or groups are ranked according to power or authority, influencing their access to resources and decision-making.

Non-Verbal Behaviour

Communication without the use of spoken language, encompassing gestures, facial expressions, body language, and other physical cues.

Cultural Differences

The variety of distinct beliefs, values, behaviors, and traditions that exist among groups of people from different backgrounds or societies.