Stock XYZ Has a Beta of 1

question 58

Multiple Choice

Stock XYZ has a beta of 1.2 and an expected return of 14%; the risk-free asset (T-bills) currently earns 4%. If the portfolio of the two assets has a beta of 1.6, what are the portfolio weights?

• A) risk-free asset = 33%, stock XYZ = 67%
• B) risk-free asset = 0%, stock XYZ = 100%
• C) risk-free asset = 133%, stock XYZ = -33%
• D) risk-free asset = -33%, stock XYZ = 133%

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Definitions:

Bowel Training

A process that involves teaching individuals to have regular bowel movements at scheduled times to manage constipation or incontinence.

High-Fiber Foods

Foods rich in dietary fiber, such as fruits, vegetables, and whole grains, which are important for digestive health and can help prevent constipation.

Whole Grain Breads

Breads made from the entire kernel of grain, including the bran, germ, and endosperm, offering higher nutritional value.

Bran Pancakes

Pancakes made with bran, the outer layer of whole grains, known to be high in dietary fiber and beneficial for digestive health.