A Portfolio Comprises Cochlear (Beta of 1

question 31

Multiple Choice

A portfolio comprises Cochlear (beta of 1.4) and Westpac (beta of 1.0) . The amount invested in Cochlear is $10,000 and in Westpac is $20,000. What is the beta of the portfolio?

• A) 1.19
• B) 1.13
• C) 1.23
• D) 1.03

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Definitions:

Owner-managers

Owner-managers are individuals who both own and actively manage their business, often involved in day-to-day operations and decision-making.

Profitable Self-dealings

Transactions made within an organization that are beneficial to the parties involved, often at the expense of shareholders or ethics.

After-tax Cost

The net cost of an investment or loan after accounting for the effects of taxes on the total expense.

NPV

Net Present Value; a calculation used to determine the worth of a project or investment by discounting future cash flows to the present.