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:

Bankruptcy Court

A federal court of limited jurisdiction that handles only bankruptcy proceedings.

Order for Relief

A court order in a bankruptcy case that allows the bankruptcy process to proceed and provides the petitioner with temporary relief from debt collection actions by creditors.

Automatic Stay

In bankruptcy proceedings, the suspension of almost all litigation and other action by creditors against the debtor or the debtor’s property. The stay is effective the moment the debtor files a petition in bankruptcy.

Willful Malicious

Refers to actions taken with the intent to harm or with deliberate disregard of lawful considerations.