You Own a Portfolio Equally Invested in a Risk-Free Asset

question 35

Multiple Choice

You own a portfolio equally invested in a risk-free asset and two stocks.If one of the stocks has a beta of 1.12 and the total portfolio is equally as risky as the market,what must the beta be for the other stock in your portfolio?

• A)1.37
• B)1.54
• C)1.88
• D)1.98
• E)2.97

Recognizing the importance of observation periods and variance in evaluating portfolio performance.

Identifying the creators and the concept behind the M2 measure.

Understanding the applications and differences between Modigliani’s M2 measure and the Treynor T2 measure.

Understand the concepts and differences between strategic and responsive corporate social responsibility.

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Definitions:

Need for Cognition

An individual's tendency to engage in and enjoy activities that require thinking, reasoning, and problem-solving.

Problem Solving

The cognitive process(es) used in transforming starting information into a goal state using specified means of solution.

Verbal Comprehension

The ability to understand words, sentences, and texts; often assessed in psychological testing as an aspect of cognitive ability.

Expressional Fluency

A measure of an individual's ability to swiftly find words and articulate ideas effectively.