A Portfolio of Securities Has a Beta of 1

question 76

Multiple Choice

A portfolio of securities has a beta of 1.14. Given this, you know that:

• A)adding another security to the portfolio must lower the portfolio beta.
• B)the portfolio has more risk than a risk-free asset but less risk than the market.
• C)each of the securities in the portfolio has more risk than an average security.
• D)the portfolio has 14% more risk than a risk-free security.
• E)the expected return on the portfolio is greater than the expected market return.

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Definitions:

Tristearin

A triester derived from glycerol and stearic acid; it's a fat commonly found in animal and vegetable fats.

Aqueous Solution

A solution in which water is the solvent and can dissolve a variety of solutes, both ionic and molecular.

Immiscible Liquids

Liquids that do not mix together to form a homogeneous solution, often separating into distinct layers when combined.

Wax

A diverse class of organic compounds that are malleable at room temperature, typically consisting of long-chain alkanes, esters, or a variety of other compounds.