Assume That Two Investors Each Hold a Portfolio, and That

question 74

True/False

Assume that two investors each hold a portfolio, and that portfolio is their only asset.Investor A's portfolio has a beta of minus 2.0, while Investor B's portfolio has a beta of plus 2.0.Assuming that the unsystematic risks of the stocks in the two portfolios are the same, then the two investors face the same amount of risk.However, the holders of either portfolio could lower their risks, and by exactly the same amount, by adding some "normal" stocks with beta = 1.0.

---

Definitions:

Respected

Being accorded honor or esteem; held in high regard.

Recognized

Acknowledged or identified as having value, significance, or as meeting certain standards.

Aggressive Behavior

Actions characterized by hostility or violence intended to dominate or intimidate another person.

Quiet Section

A designated area or period intended for silence or significantly reduced noise levels.