You Are Managing a Portfolio of 10 Shares Which Are

question 66

Multiple Choice

You are managing a portfolio of 10 shares which are held in equal amounts.The current beta of the portfolio is 1.64, and the beta of Share A is 2.0.If Share A is sold, what would the beta of the replacement share have to be to produce a new portfolio beta of 1.55?

• A) 1.10
• B) 1.00
• C) 0.90
• D) 0.75
• E) 0.50

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Definitions:

Maintenance Rehearsal

A cognitive process that involves repeatedly verbalizing or thinking about a piece of information to keep it in short-term memory longer.

Chunking

A memory technique involving the organization of information into smaller, manageable units or chunks, making it easier to remember.

Primacy Effect

The tendency to remember information at the beginning of a list better than the information that follows.

Recency Effect

The tendency to remember the most recently presented information best in a series of items.