A Portfolio Consists of Two Stocks and Has a Beta

question 41

Multiple Choice

A portfolio consists of two stocks and has a beta of 1.07.The first stock has a beta of 1.48 and comprises 38 percent of the portfolio.What is the beta of the second stock?

• A).41
• B).66
• C).82
• D)1.28
• E)1.35

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Definitions:

Average Variable Cost

The total variable costs of production divided by the quantity of output produced, representing the variable cost per unit of output.

Total Variable Cost

The total of all expenses that vary with the level of output or production, including costs for materials and labor.

Total Fixed Cost

The sum of all costs that remain constant regardless of the level of production or output.

Total Revenue

The overall amount of money generated by a firm from its sales activities before any expenses are subtracted.