A Stock Has a Beta of 1

question 58

Multiple Choice

A stock has a beta of 1.48 and an expected return of 17.3 percent.A risk-free asset currently earns 4.6 percent.If a portfolio of the two assets has a beta of .98, then the weight of the stock must be ___ and the risk-free weight must be___.

• A).56; .44
• B).34; .66
• C).44; .56
• D).66; .34
• E).72; .28

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Definitions:

Middle Managers

Individuals within an organization who manage at a level below top leadership but above frontline employees, responsible for implementing the company's strategies and policies.

Self-Interests

Actions or decisions guided by personal benefit, gain, or interest, often without regard for others.

Strategies

Broad plans or sets of actions designed to achieve specific goals or outcomes within an organization or individual endeavor.

Commission-Based

A payment model where compensation is tied directly to performance, such as the amount of sales generated or the success in meeting specified goals.