You Want Your Portfolio Beta to Be 1

question 224

Multiple Choice

You want your portfolio beta to be 1.10. Currently, your portfolio consists of $3,000 invested in stock A with a beta of 1.65 and $2,000 in stock B with a beta of.72. You have another $5,000 to invest and want to divide it between an asset with a beta of 1.48 and a risk-free asset. How much should you invest in the risk-free asset?

• A) $0
• B) $775
• C) $1,885
• D) $3,115
• E) $5,000

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Definitions:

Product-Distribution

Product-distribution involves the process of making a product or service available for the consumer or business user that needs it, which can include warehousing, logistics, and retailing.

Geographic Region

An area defined by physical, natural, human, or cultural characteristics that distinguish it from other areas.

Franchisees

Individuals or entities that acquire the rights to operate and sell a franchisor's products or services within a certain territory.

Proven Product

A product that has been demonstrated to meet customer expectations and achieve market success through sales performance and customer acceptance.