Margaret Has a Portfolio Consisting of a Risk-Free Asset and a Stock

question 400

Multiple Choice

Margaret has a portfolio consisting of a risk-free asset and a stock with a beta of 1.5. If she wishes to lower the overall beta of her portfolio Margaret could _____ the portfolio weight of the risk-free asset and _____ the portfolio weight of the stock.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease
• E) increase; not change

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Definitions:

Preventive Mental Health

Approaches or practices aimed at reducing the incidence, prevalence, and recurrence of mental health disorders and their associated risks.

Psychological Disorders

Mental health conditions characterized by disturbances in thought, emotion, or behavior, leading to personal distress or impaired functioning.

Systematic Desensitization

A behavioral therapy technique used to reduce phobia-related anxiety through gradual exposure to the fear stimulus combined with relaxation exercises.

Progressive Relaxation

A technique that involves tightening and then relaxing each muscle group in succession to induce physical and mental relaxation.