What Is the Beta for a Portfolio Equally Weighted in Four

question 21

Multiple Choice

What is the beta for a portfolio equally weighted in four assets: A, the market portfolio; B, which has half the risk of A; C, which has twice the risk of A; and D, which is risk-free?

• A) 0.500
• B) 0.750
• C) 0.875
• D) 1.250
• E) 1.375

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Definitions:

Ordinary Maintenance

Routine maintenance and repairs that are performed to keep equipment in its normal operating condition.

Long-Lived Assets

Assets that provide economic benefits to a business for more than one fiscal year, such as buildings, machinery, and equipment.

Architect

A professional who designs buildings and in many cases also supervises their construction.

Accumulated Depreciation

This is the cumulative depreciation of an asset up to a single point in its life, reflecting how much of the asset's value has been used up over time.