In a Given Portfolio, Replacing an Existing Investment with a Lower

question 3

Multiple Choice

In a given portfolio, replacing an existing investment with a lower beta investment results in _____. 

• A)an increase in the expected rate of rate return of the portfolio
• B)a decrease in the actual rate of return of the portfolio
• C)a decrease in the required rate of return of the portfolio
• D)an increase in the systematic risk of the portfolio
• E)the portfolio beta moving toward 1.0

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Definitions:

Agriculture

The practice of cultivating soil, producing crops, and raising livestock for human use and consumption.

Transportation

The system or means by which passengers or goods are moved from one place to another.

Construction

The process of building or assembling infrastructure, buildings, and other physical structures.

Unionization Rate

The percentage of employees in a labor force that are members of a union.