Jim Bowles Is an Investor Who Believes the Economy Is

question 93

Multiple Choice

Jim Bowles is an investor who believes the economy is gaining strength and therefore wishes to increase the risk of his 14-security portfolio. Each security has a current market value of $5,000, and the current beta of the portfolio is 1.02. The beta of the least risky security is 0.76. If Jim replaces the least risky security with another security with the same market value but a beta of 1.45, what will the portfolio beta be then?

• A) 1.03
• B) 1.07
• C) 1.08
• D) 1.04

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Definitions:

Meiosis

The process that produces sperm and ova, each of which contains only half of the parent cell’s original complement of 46 chromosomes.

Identical Twins

Twins who have developed from a single fertilized egg, sharing the same genetic makeup.

Monozygotic Twins

Identical twins that develop from a single fertilized egg, sharing the same genetics.

Dizygotic Twins

Also known as fraternal twins, are siblings that result from the fertilization of two different eggs by two different sperm cells, leading to the birth of genetically unique siblings.