You Want Your Portfolio Beta to Be 1

question 414

Multiple Choice

You want your portfolio beta to be 1.30. Currently, your portfolio consists of $200 invested in stock A with a beta of 1.6 and $400 in stock B with a beta of .8. You have another $600 to invest and
Want to divide it between an asset with a beta of 1.9 and a risk-free asset. Approximately how much
Should you invest in the risk-free asset?

• A) $0
• B) $116
• C) $160
• D) $440
• E) $484

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Definitions:

Respiratory Distress Syndrome

Weak and irregular breathing, typical of preterm babies.

Preterm Babies

are infants born before 37 weeks of pregnancy have been completed, often requiring specialized care due to their underdeveloped bodies and organs.

Breathing

The process of inhaling and exhaling air to facilitate gas exchange within the lungs.

Milk Production

is the biological process by which mammals produce milk to feed their young, involving hormonal regulation and nutrient supply.