Your Portfolio Has a Beta of 1

question 45

Multiple Choice

Your portfolio has a beta of 1.12. The portfolio consists of 20 percent U.S. Treasury bills, 50 percent stock A, and 30 percent stock B. Stock A has a risk-level equivalent to that of the overall market. What is the beta of stock B?

• A) 1.47
• B) 1.52
• C) 1.69
• D) 1.84
• E) 2.07

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Definitions:

Fluid Intelligence

Intellectual ability that reflects basic information processing skills, including working memory, processing speed, and the ability to detect relations among stimuli and draw inferences; underlies learning, is not influenced by culture, and reflects brain functioning.

Pragmatic Intelligence

The ability to solve real-world problems by adapting to, shaping, or selecting environments.

Crystallized Intelligence

The ability to use skills, knowledge, and experience gained over time, often improving as one gets older.

Fluid Intelligence

The ability to think abstractly, reason quickly, and solve problems in novel situations, independent of acquired knowledge.