Determine the Beta of a Portfolio Consisting of the Following

question 61

Multiple Choice

Determine the beta of a portfolio consisting of the following common stocks: $$\begin{array} { l l l } \text { Security } & \text { Market Value } & \text { Beta } \\\text { Boeing } & \$ 5,000 & 1.2 \\\text { Exxon } & \$ 4,000 & 0.8 \\\text { Duke Power } & \$ 2,500 & 0.6 \\\text { Blockbuster Video } & \$ 2,000 & 1.4 \\\text { Coca-Cola } & \$ 7,500 & 1.0\end{array}$$

• A) 0.93
• B) 0.85
• C) 1.00
• D) 1.14

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Definitions:

U.S. Trade Deficits

occur when the total value of goods and services the United States imports exceeds the value of what it exports.

Government Bonds

Securities issued by a government to raise funds from the public to finance its expenditure.

Government Spending Crowding Out

A situation where increased government spending leads to a reduction in private sector spending, either because of higher interest rates or because funds available for private investments are used for government projects.

Opportunity Cost

is the benefit that is missed or given up when choosing one alternative over another.