What Is the Beta of a Portfolio Comprised of the Following

question 117

Multiple Choice

What is the beta of a portfolio comprised of the following securities?
$\begin{array} { | l | l | l | } \hline \text { Share } & \text { Amount Invested } & \text { Security Beta } \\\hline \mathrm { A } & € 2,000 & 1.20 \\\hline \mathrm { B } & € 3,000 & 1.46 \\\hline \mathrm { C } & € 5,000 & .72 \\\hline\end{array}$

• A)1.008
• B)1.014
• C)1.038
• D)1.067
• E)1.127

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Definitions:

Present Value

The current financial value of a future cash sum or series of inflows, adjusted with a determined rate of return.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations based on its earnings before interest and taxes.

Creditors' Protection

Legal and financial mechanisms designed to safeguard the interests and rights of creditors, ensuring they receive payment owed to them.

Effective Interest Rate

The real rate of interest earned or paid on a loan or investment over a period, taking into account the effect of compounding.