Amy Has a Portfolio with a Beta of 1

question 13

Multiple Choice

Amy has a portfolio with a beta of 1.26 but has decided to lower her investment risk.Adding which one of the following securities to her portfolio is most assuredly going to lower the risk of the portfolio?

• A)A stock that has a covariance with the market of 0.89
• B)A security that has a standard deviation of 11 percent
• C)A security with a beta of 1.58
• D)U.S.Treasury bills
• E)A mix of small-company and large-company stocks

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