A Portfolio Is Comprised of 35 Securities with Varying Betas

question 17

Multiple Choice

A portfolio is comprised of 35 securities with varying betas.The lowest beta for an individual security is 0.74 and the highest of the security betas of 1.51.Given this information,you know that the portfolio beta:

• A)must be 1.0 because of the large number of securities in the portfolio.
• B)is the geometric average of the individual security betas.
• C)must be less than the market beta.
• D)will be between 0 and 1.0.
• E)will be greater than or equal to 0.74 but less than or equal to 1.51.

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Definitions:

Sensate Culture

A societal framework that prioritizes sensory experience and pleasure over intellectual or spiritual considerations.

Sorokin

Pitirim Sorokin was a Russian-American sociologist known for his contributions to social cycles theory and for founding the sociology department at Harvard University.

Cyclical Theory

A theory that suggests historical events and stages of society repeat themselves in cycles due to underlying patterns or forces.

Social System

A social system is an interdependent set of cultural and structural elements that interact and influence human behaviour and relationships in a society.