You Want Your Portfolio Beta to Be 1

question 17

Multiple Choice

You want your portfolio beta to be 1.10. Currently, your portfolio consists of $3,000 invested in stock A with a beta of 1.65 and $2,000 in stock B with a beta of .72. You have another $5,000 to invest
And want to divide it between an asset with a beta of 1.48 and a risk-free asset. How much should
You invest in the risk-free asset?

• A) $0
• B) $775
• C) $1,885
• D) $3,115
• E) $5,000

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Definitions:

Differential Carrier Oil Change

The procedure of replacing the oil in the differential carrier to ensure proper lubrication and function of the vehicle's differential.

Drive Axles

A key component in a vehicle’s drivetrain, responsible for transferring power from the transmission to the wheels, enabling motion.

Wheel Ends

The components located at the ends of axles, including items such as the wheel, hub, and bearings, which are essential for wheel attachment and rotation.

Differential Carrier Pinion Angle

The angle at which the pinion gear engages the ring gear in a differential, critical for efficient power transfer and component longevity.