What Is the Portfolio Beta If 25% of Your Funds

question 57

Multiple Choice

What is the portfolio beta if 25% of your funds are invested in the market portfolio, 25% in an asset with twice as much risk as the market portfolio, and the remainder in a risk-free asset?

• A) 0.25
• B) 0.50
• C) 0.75
• D) 1.00
• E) 1.25

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Definitions:

Statistical Inference

The process of using data from a sample to make generalizations or predictions about a larger population.

Arithmetic Mean

The sum of a set of numerical values divided by the number of values, commonly referred to as the average.

Midrange

The arithmetic mean of the maximum and minimum values in a data set, serving as a measure of central tendency.

Mode

The value that appears most frequently in a data set, representing the highest peak in a distribution.