If a Two-Stock Portfolio Is Equally Invested in Stocks with Betas

question 100

Multiple Choice

If a two-stock portfolio is equally invested in stocks with betas of 1.4 and 0.7,then the portfolio beta is:

• A) 0.70.
• B) 1.05.
• C) 1.40.
• D) 2.10.

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Definitions:

Operating Costs

Expenses associated with the day-to-day operation of a business, excluding financing costs and taxes.

Useful Life

The estimated period over which an asset is expected to be usable for its intended purpose, affecting its depreciation.

Machine

Equipment or apparatus designed to perform a specific task in the manufacturing process.

Present Value

The immediate worth of anticipated money or streams of cash flows, computed with an agreed-upon rate of return.