A Portfolio Consists of Five Securities That Have Individual Betas

question 8

Multiple Choice

A portfolio consists of five securities that have individual betas of 1.38,0.87,1.02,1.49,and 0.67.You do not know the portfolio weight of each security.What do you know with certainty?

• A)The portfolio beta will not be affected by any change in the portfolio weights.
• B)The portfolio beta will not change if an additional security with a beta of 1 is added to the portfolio.
• C)The portfolio beta will be greater than the market beta.
• D)The portfolio beta will be less than 1.49 and greater than 0.67.
• E)The optimal portfolio beta for any investor must be greater than 0 and less than 1.

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Definitions:

Gender Wage Gap

The average difference in earnings between women and men in the workforce, often highlighted as a measure of gender inequality.

Efficiency Wages

A theory suggesting that higher wages can enhance worker productivity by increasing morale, reducing turnover, and attracting more skilled employees.

Human Capital

The skills, knowledge, and experience possessed by an individual or workforce, viewed in terms of their value or cost to an organization.

Human Capital

Represents the skills, knowledge, and experience possessed by an individual or population, viewed in terms of their value or cost to an organization or country.