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.

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Definitions:

Contracts Body

Refers to the process of muscle fibers shortening, generating force that results in movement or tension within the body.

Carries Oxygen

Refers to the function of hemoglobin in red blood cells, transporting oxygen from the lungs to the body's tissues.

ATP Producing Mitochondria

ATP producing mitochondria refer to the mitochondria’s role in cellular respiration, where they convert nutrients into adenosine triphosphate (ATP), the cell’s main energy currency.

Houses ATP

An informal way of describing mitochondria, organelles within cells that generate adenosine triphosphate (ATP), the cell's main energy currency.