You Own Two Risky Assets, Both of Which Plot on the Security

question 4

Multiple Choice

You own two risky assets, both of which plot on the security market line. Asset A has an expected return of 12% and a beta of 0.8. Asset B has an expected return of 18% and a beta of 1.4. If your
Portfolio beta is the same as the market portfolio, what proportion of your funds are invested in
Asset A?

• A) 0.33
• B) 0.50
• C) 0.67
• D) 1.33
• E) 1.67

---

Definitions:

Renal Cortex

The outer portion of the kidney where initial filtration of blood occurs and includes the glomeruli and the convoluted tubules.

Adrenal Glands

Small glands located above the kidneys that produce hormones such as adrenaline and cortisol, involved in stress response and metabolism.

Peritoneal Membrane

A thin, delicate membrane that lines the abdominal and pelvic cavities and covers most of the abdominal organs.

Pleural Membrane

A thin, double-layered structure that envelops the lungs and lines the chest cavity to facilitate lung movement during breathing.