Assume That the Single Factor APT Model Applies and a Portfolio

question 11

Multiple Choice

Assume that the single factor APT model applies and a portfolio exists such that 2/3 of the funds are invested in Security Q and the rest in the risk-free asset. Security Q has a beta of 1.5. The portfolio has a beta of:

• A) 0.00.
• B) 0.50.
• C) 0.75.
• D) 1.00.
• E) 1.50.

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Definitions:

Working Memory

A mental system with restricted capability tasked with temporarily storing information for processing purposes.

Conscious Rehearsal

The intentional practice or repetition of information in one's mind to facilitate memorization.

Implicit Memory

Refers to memories that are recalled unconsciously and effortlessly, influencing thoughts and behaviors without our awareness.

Mourning War

Indigenous North American warfare practices where raids were conducted to avenge the death of a tribe member or to capture members from other tribes in order to replace the deceased, thus maintaining social stability within the tribe.