Which One of the Following Statements Is Correct Concerning a Portfolio

question 30

Multiple Choice

Which one of the following statements is correct concerning a portfolio beta?

• A) Portfolio betas range between −1.0 and +1.0.
• B) A portfolio beta is a weighted average of the betas of the individual securities contained in the portfolio.
• C) A portfolio beta cannot be computed from the betas of the individual securities comprising the portfolio because some risk is eliminated via diversification.
• D) A portfolio of U.S. Treasury bills will have a beta of +1.0.
• E) The beta of a market portfolio is equal to zero.

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Definitions:

Economic Efficiency

The optimization of resources to best fulfill the needs and wants of individuals and society with the least waste.

Government Regulations

Rules set by government bodies to control or guide specific activities within the economy or society.

Long-Run Economic

Refers to an extended period during which all factors of production and outputs can be adjusted.

Differentiated Product

A product that is distinguished from similar products in the market by unique characteristics, leading to customer perception that there is no perfect substitute.