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:

SWOT Analysis

A strategic planning tool that helps organizations identify their Strengths, Weaknesses, Opportunities, and Threats related to business competition or project planning.

Competition Analysis

The process of identifying, assessing, and analyzing competitors in the market to understand their strengths, weaknesses, strategies, and market position.

Mission Statement

A formal summary of the aims and values of a company, organization, or individual, often guiding decision-making and strategy.

Company-Oriented

A business perspective that focuses primarily on the company's needs, goals, and capabilities rather than on those of the customers or the market.