Steve Brickson Currently Has an Investment Portfolio That Contains Four

question 20

Multiple Choice

Steve Brickson currently has an investment portfolio that contains four stocks with a total value equal to $80,000. The portfolio has a beta (β) equal to 1.4. In order to earn higher returns, Steve wants to invest an additional $20,000 in a stock that has β equal to 2.4. After Steve adds the new stock to his portfolio, what will the portfolio's beta be?

• A) 1.6
• B) 1.8
• C) 1.9
• D) 2.0
• E) 2.1

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Definitions:

Direct Materials

The raw materials that are directly traced and integrated into the final product and are a significant part of the manufacturing cost.

Weighted-Average Method

is an inventory costing method that assigns the average cost of goods available for sale to both ending inventory and cost of goods sold.

Conversion Costs

The sum of direct labor and manufacturing overhead costs, representing the costs incurred to convert raw materials into finished products.

Direct Materials

Raw materials that are directly traceable to the production of a specific product and included in the cost of that product.