A Portfolio Contains Two Assets

question 110

Multiple Choice

A portfolio contains two assets.The first asset comprises 40% of the portfolio and has a beta of 1.2. The other asset has a beta of 1.5.The portfolio beta is

• A)1.35
• B)1.38
• C)1.42
• D)1.50
• E)1.55

Proficiency in calculating a company's market-based ratios (e.g., price-earnings ratio, dividend yield).

Skill in assessing a company's liquidity through working capital, current ratio, and acid-test ratio.

Competence in evaluating a company's profitability through margins and returns.

Capacity to interpret a company's operating efficiency through turnover ratios.

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Definitions:

Direct Labor Variances

The differences between the actual costs of direct labor and the standard or expected costs, used for budgeting and cost control.

Direct Labor Workers

Employees who are directly involved in the production of goods or services.

Property, Plant, and Equipment

Long-term tangible assets held for business use and not expected to be converted to cash in the short term.

Variable Overhead Rate

Variable overhead rate is the cost per unit of indirect or overhead activities that vary with production volume, such as electricity for machinery.