Which One of the Following Statements Is Correct Concerning a Portfolio

question 30

Multiple Choice

Which one of the following statements is correct concerning a portfolio beta?

• A) Portfolio betas range between −1.0 and +1.0.
• B) A portfolio beta is a weighted average of the betas of the individual securities contained in the portfolio.
• C) A portfolio beta cannot be computed from the betas of the individual securities comprising the portfolio because some risk is eliminated via diversification.
• D) A portfolio of U.S. Treasury bills will have a beta of +1.0.
• E) The beta of a market portfolio is equal to zero.

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Definitions:

Profits And Losses

Financial results indicating the difference between a business's revenues and its costs over a period; profits indicate revenues exceed costs, whereas losses indicate the opposite.

Scarce Resources

Natural, human, and manufactured assets available in limited quantities that are used for the production of goods and services.

Highest Valued Uses

Refers to allocating resources or goods in a manner that maximizes utility or benefits for an individual or society.

Economic Profits

Profits exceeding the total opportunity costs of all resources used in production; also known as abnormal or supernormal profits.