A Stock Has a Beta of 1

question 35

Multiple Choice

A stock has a beta of 1.2 and an expected return of 17 percent.A risk-free asset currently earns 5.1 percent.The beta of a portfolio comprised of these two assets is 0.85.What percentage of the portfolio is invested in the stock?

• A)71 percent
• B)77 percent
• C)84 percent
• D)89 percent
• E)92 percent

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Definitions:

Protoderm

The outermost layer of cells in the early embryo of plants, which develops into the epidermis.

Ground Meristem

The part of a plant embryo that develops into the ground tissue of the plant, which includes the cortex and pith.

Procambium

A primary meristematic tissue in plants, which differentiates into vascular tissues (xylem and phloem).

Primary Xylem

The part of the xylem (the vascular tissue in plants that conducts water and dissolved nutrients upward from the root) that forms first, mainly in seedlings and young plants.