A Fully Hedged Stock Portfolio Will Have a Beta Equal

question 29

Multiple Choice

A fully hedged stock portfolio will have a beta equal to which one of the following?

• A)an average asset
• B)U.S. Treasury bill
• C)S&P 500
• D)the beta of the stock portfolio exclusive of the hedge
• E)one-half of the beta of the stock portfolio exclusive of the hedge

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Definitions:

Independent Variable

In experimentation or statistical analysis, the variable that is manipulated or changed to observe its effects on the dependent variable.

Dependent Variable

In statistical and mathematical analysis, the variable whose value is subject to the influence of another variable.

Horizontal Axis

In graphs and charts, this axis typically represents the independent variable or time period under examination.

Vertical Axis

The “up-down” or “north-south” measurement line on a graph or grid.