Margaret Has a Portfolio Consisting of a Risk-Free Asset and a Stock

question 241

Multiple Choice

Margaret has a portfolio consisting of a risk-free asset and a stock with a beta of 1.5. If she wishes to lower the overall beta of her portfolio Margaret could _____ the portfolio weight of the risk-free
Asset and _____ the portfolio weight of the stock.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease
• E) increase; not change

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Definitions:

Premium Sound System

A high-quality audio system designed to deliver superior sound reproduction.

Conflict Management

Conflict management involves implementing strategies to limit the negative aspects of conflict while increasing the positive aspects by enhancing learning and group outcomes, including effectiveness or performance.

Compromise

A method of resolving disagreements wherein all parties make concessions to reach a mutually acceptable solution.

Cognition-based

Relating to the mental action or process of acquiring knowledge and understanding through thought, experience, and the senses.