Stock XYZ Has a Beta of 1

question 134

Multiple Choice

Stock XYZ has a beta of 1.2 and an expected return of 14%; the risk-free asset (T-bills) currentlyearns 4%. If the portfolio of the two assets has a beta of 0.8, what are the portfolio weights?

• A) risk-free asset = 67%, stock XYZ = 33%
• B) risk-free asset = 33%, stock XYZ = 67%
• C) risk-free asset = 3%, stock XYZ = 97%
• D) risk-free asset = 50%, stock XYZ = 50%

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Definitions:

Parental Investment

signifies any investment by a parent in an individual offspring that increases the offspring's chance of surviving (and hence reproductive success) at the cost of the parent's ability to invest in other offspring.

Evolutionary Perspective

A theoretical approach in psychology and other sciences that explores how evolutionary theory informs our understanding of human behaviors and mental processes.

Surviving Offspring

Surviving offspring refers to the progeny of organisms that survive to adulthood and have the potential to reproduce.

High Social Status

A position of respect, prestige, or superiority in a society or group based on wealth, authority, or other factors.