An Investor Has a Portfolio Comprised of Stock A, Which

question 79

Multiple Choice

An investor has a portfolio comprised of stock A, which has a beta of 1.4 and an expected return of 10%, and Treasury bills, which have an expected return of 4%. The portfolio has an expected return
Of 7.30%. What is the portfolio weight of stock A?

• A) 40%
• B) 45%
• C) 50%
• D) 55%
• E) 60%

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Definitions:

Prepaid Insurance

An asset account representing insurance payments made in advance of the coverage period, recognized as an expense over time.

Insurance Payable

A liability account that represents amounts owed for insurance premiums that are due but not yet paid.

Proprietorship

A business owned by one individual.

Drawing

Drawing refers to the withdrawal of cash or other assets from a company by the owner(s) for personal use, decreasing the owner's equity in the business.