Two Investments, X and Y, Have Beta Values of 0

question 221

Multiple Choice

Two investments, X and Y, have beta values of 0.1 and 3.0 respectively.Based on this, we can claim that, relative to the market portfolio,

• A)both have more nondiversifiable risk than the market portfolio.
• B)both have less nondiversifiable risk than the market portfolio.
• C)X has more nondiversifiable risk and Y has less nondiversifiable risk than the market portfolio.
• D)X has less nondiversifiable risk and Y has more nondiversifiable risk than the market portfolio.

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Definitions:

Wealth of The Nation

A measure of the total value of all assets owned by the inhabitants of a country, including natural resources, capital goods, and human capital.

Re-expression

The process of applying a mathematical transformation to a dataset with the goal of achieving a more linear or normal distribution.

Scatterplot

A graphical representation using dots to show the relationship between two quantitative variables, helping to visualize any correlations.

Quantities X and Y

Refers to variables or values that are often used in mathematical equations or statistical models to represent data, measurements, or unknowns.