You Have a $1,000 Portfolio Which Is Invested in Stocks

question 114

Multiple Choice

You have a $1,000 portfolio which is invested in stocks A and B plus a risk-free asset. $350 is invested in stock A. Stock A has a beta of 1.5 and stock B has a beta of .8. How much needs to be invested in stock B if you want a portfolio beta of .90?

• A) $0
• B) $351
• C) $382
• D) $469
• E) $650

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Definitions:

Empathic Understanding

The ability to accurately perceive and understand the feelings and thoughts of others from their point of view.

Client-centered Therapy

A form of psychotherapy developed by Carl Rogers that emphasizes providing a supportive emotional environment for clients, who lead their own process of self-discovery.

Subjective Experiences

Personal, individual experiences that are influenced by personal perceptions, feelings, and interpretations, and not necessarily observable by others.

Nondirective Therapy

A form of psychotherapy in which the therapist refrains from giving advice or interpretation, allowing the client to lead the direction of the therapy.