Assume That the Single Factor APT Model Applies and a Portfolio

question 38

Multiple Choice

Assume that the single factor APT model applies and a portfolio exists such that 1/2 of the funds are invested in Security Q and the rest in the risk-free asset. Security Q has a beta of 1.8. The portfolio has a beta of:

• A) 0.0.
• B) 0.8.
• C) 0.9.
• D) 1.0.
• E) 1.8.

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Definitions:

Nonsampling Error

Errors in data collection or analysis that are not related to the process of selecting a sample from the population.

Coverage Error

The error that occurs when the sample does not adequately represent the population being studied, often due to undercoverage or overcoverage.

Statistical Inference

The process of using data analysis to deduce properties of an underlying distribution of probability.

Huge Data

A colloquial term likely referring to "Big Data," which describes extremely large data sets that may be analyzed computationally to reveal patterns, trends, and associations.