A Portfolio Is Made Up of Stocks A, B, C

question 4

Multiple Choice

A portfolio is made up of Stocks A, B, C, and D in the proportion of 20%, 30%, 25%, and 25% respectively. The nondiversifiable risks of the stocks as measured by their betas are 0.4, 1.2, 2.5, and 1.75 for Stock A, B, C, and D respectively. The expected returns of the stocks are 12%, 24%, 30%, and 28% respectively. Measure the beta of the portfolio.

• A) 1.8
• B) 1.9
• C) 1.5
• D) 1.4
• E) 1.3

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Definitions:

Transnational Corporation

A large company operating and investing in multiple countries across the globe, managing production or delivering services in more than one country.

National Home

A concept advocating for a designated territory or homeland for a national group, often discussed in the context of political and historical disputes.

Worldwide

Pertaining to or involving the entire world; global in scope or application.

Licensing

The granting of permission by an authority or owner to use a certain piece of intellectual property, product, or service under agreed terms.