A Portfolio with a Beta of 1.26

question 102

Multiple Choice

A portfolio with a beta of 1.26

• A) is 126% more risky than the overall market.
• B) has less risk than the lowest risk security held within that portfolio.
• C) is 26% more risky than a risk-free asset.
• D) is considerably more risky than the overall market.

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Definitions:

Relative Comparisons

The act of evaluating something in relation to another similar item.

Availability Heuristic

A cognitive shortcut that relies on the immediate examples that come to a person’s mind when evaluating a specific topic, concept, method or decision.

Representative Heuristic

A mental shortcut that involves making a probability judgement by comparing an object or event to a prototype of the object or event.

Additive Strategy

An approach where elements are added together to solve problems or make decisions, often seen in mathematics or decision-making processes.