Explain How the Beta of a Portfolio Can Equal the Market

question 71

Essay

Explain how the beta of a portfolio can equal the market beta if 50 percent of the portfolio is invested in a security that has twice the amount of systematic risk as an average risky security.

---

Definitions:

Eating Disorder

Mental disorders defined by abnormal eating habits that negatively affect a person's physical or mental health.

Laxatives

Substances used to stimulate or facilitate bowel movements, often used to treat constipation or prepare for certain medical procedures.

Diuretics

Medications designed to increase the amount of water and salt expelled from the body as urine, commonly used to treat high blood pressure, heart failure, and certain kidney or liver problems.

Lean

A systematic method for waste minimization within a manufacturing system without sacrificing productivity, often associated with the Toyota Production System.