You Would Like to Combine a Risky Share with a Beta

question 45

Multiple Choice

You would like to combine a risky share with a beta of 1.5 with Treasury bills in such a way that the risk level of the portfolio is equivalent to the risk level of the overall market.What percentage of the
Portfolio should be invested in Treasury bills?

• A)25%
• B)33%
• C)50%
• D)67%
• E)75%

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Definitions:

Tools

Instruments or software used to perform tasks or functions, especially in the context of technical or specialized processes.

Independent Populations

Two or more populations that do not affect each other, such that measurements from one population are not related to measurements from the others.

Two-tailed Test

A statistical hypothesis test in which the area of rejection is on both sides of the sampling distribution, allowing for the exploration of the possibility that a parameter is significantly greater than or less than a specified value.

Means

The average of a set of numerical values, calculated as the sum of the values divided by the number of values.