Two Investments, X and Y, Have Beta Values of 0

question 244

Multiple Choice

Two investments, X and Y, have beta values of 0.1 and 3.0 respectively. Based on this, we can claim that, relative to the market portfolio,

• A) both have more nondiversifiable risk than the market portfolio.
• B) both have less nondiversifiable risk than the market portfolio.
• C) X has more nondiversifiable risk and Y has less nondiversifiable risk than the market portfolio.
• D) X has less nondiversifiable risk and Y has more nondiversifiable risk than the market portfolio.

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Definitions:

Mechanism

A detailed description of the step-by-step process by which a chemical reaction occurs, including the breaking and formation of bonds.

Carboxylic Acid

Organic acids characterized by the presence of at least one carboxyl group (-COOH), widely found in nature.

Derivative

In chemistry, a compound that is derived from a similar compound by a chemical reaction.

Propyl Benzoate

A chemical compound used as a fragrance and flavoring agent, consisting of the propyl ester of benzoic acid.