Portfolio AB Was Created by Investing in a Combination of Stocks

question 54

Multiple Choice

Portfolio AB was created by investing in a combination of Stocks A and B.Stock A has a beta of 1.2 and a standard deviation of 25%.Stock B has a beta of 1.4 and a standard deviation of 20%.Portfolio AB has a beta of 1.25 and a standard deviation of 18%.Which of the following statements is CORRECT?

• A) Stock A has more market risk than Stock B but less stand-alone risk.
• B) Portfolio AB has more money invested in Stock A than in Stock B.
• C) Portfolio AB has the same amount of money invested in each of the two stocks.
• D) Portfolio AB has more money invested in Stock B than in Stock A.
• E) Stock A has more market risk than Portfolio AB.

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Definitions:

Attribution

The process by which individuals explain the causes of their own and others' behavior, typically by ascribing behavior to internal dispositions or external situations.

Primary Drive

A fundamental biological need that motivates behavior, such as hunger or thirst.

Social Identity Theory

is a psychological framework that explains how people categorize themselves and others into various social groups, impacting their behavior and attitudes.

Social Categorization

The process by which individuals classify others into groups based on shared characteristics, often to simplify social perception.