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

---

Definitions:

Abstraction

The process of reducing complexity by focusing on the essential characteristics of something, ignoring irrelevant detail.

Processes

Sequences of actions or steps taken in order to achieve a particular end.

Shorthand

A method of rapid writing by using symbols or abbreviations for words or phrases, traditionally used for taking notes or transcribing speeches.

Symbols

Are concrete objects or abstract terms that represent something else.