Currently,you Own a Portfolio Comprised of the Following Three Securities

question 15

Multiple Choice

Currently,you own a portfolio comprised of the following three securities.How much of the riskiest security should you sell and replace with risk-free securities if you want your portfolio beta to equal 90 percent of the market beta?

• A)$7,023.15
• B)$7,811.29
• C)$8,666.67
• D)$9,613.64
• E)$10,318.50

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Definitions:

Representative Heuristic

A cognitive bias in which an individual categorizes a situation based on how similar it is to their prototype of a particular event or behavior, often leading to errors in decision making or judgment.

Stroop Effect

A psychological phenomenon that demonstrates the interference in reaction time when the name of a color is printed in a color not denoted by the name.

Isolated Letters

Individual alphabetic characters presented separately from words or sentences, often used in reading or perception studies.

Stroop Effect

A phenomenon in cognitive psychology where there is a delay in the reaction time of a task when the color of words on a test and their meaning differ.