You Would Like to Combine a Risky Stock with a Beta

question 153

Multiple Choice

You would like to combine a risky stock with a beta of 1.5 with Treasury bills in such a way that the risk level of the portfolio is equivalent to the risk level of the overall market. What percentage of the portfolio should be invested in Treasury bills?

• A) .25
• B) .33
• C) .50
• D) .67
• E) .75

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Definitions:

Oil Quality

A measure of the physical and chemical properties of oil, indicating its suitability for various uses or its compliance with standards.

Price Per Barrel

The cost of a barrel of commodities like oil, typically used as a benchmark for pricing.

Estimating Mean Value

The process of calculating the average value of a set of numbers or measurements.

Predicting Individual Value

The process of estimating the monetary or intrinsic value of a specific entity or individual based on relevant parameters.