Steve Brickson Currently Has an Investment Portfolio That Contains Four $\beta$

question 4

Multiple Choice

Steve Brickson currently has an investment portfolio that contains four shares with a total value equal to R80,000.The portfolio has a beta (( $\beta$ ) .) equal to 1.4.Steve wants to invest an additional R20,000 in a share that has ( $\beta$ ) . = 2.4.After Steve adds the new share to his portfolio, what will be the portfolio's beta?

• A) 1.6
• B) 1.9
• C) 2.0
• D) Not enough information is given to compute the portfolio's beta ( (\(\beta\)). ).
• E) None of the above is correct.

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Definitions:

Absorption Costing

An accounting method that includes all manufacturing costs – direct materials, direct labor, and both variable and fixed overhead – in the cost of a product.

Contribution Margin

A financial metric that represents the difference between a product's sales revenue and its variable costs.

Variable Costing

A costing method that includes only variable manufacturing costs—direct materials, direct labor, and variable manufacturing overhead—in the cost of a unit of product.

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a unit of product.