A Stock Has a Beta of 1

question 34

Multiple Choice

A stock has a beta of 1.56 and an expected return of 17.3 percent.A risk-free asset currently earns 5.1 percent.If a portfolio of the two assets has a beta of 1.06,what are the portfolio weights?

• A)Stock weight = 0.28; risk-free weight = 0.72
• B)Stock weight = 0.032; risk-free weight = 0.68
• C)Stock weight = 0.44; risk-free weight = 0.56
• D)Stock weight = 0.68; risk-free weight = 0.32
• E)Stock weight = 0.72; risk-free weight = 0.28

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Definitions:

Social Entrepreneur

Runs a social enterprise, a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by the need to maximise profit for shareholders and owners.

Entrepreneurial Success

The achievement of desired business goals and objectives by individuals who organize and operate enterprises, taking on greater than normal financial risks.

Entrepreneurs

Individuals who initiate, manage, and assume the risks of starting and operating a new business venture, often innovating and implementing new ideas.

Business Degree

An academic degree awarded to students who have completed coursework in business administration or management.