A Portfolio of Securities Has a Beta of 1

question 52

Multiple Choice

A portfolio of securities has a beta of 1.14.Given this,you know that:

• A) adding another security to the portfolio must lower the portfolio beta.
• B) the portfolio has more risk than a risk-free asset but less risk than the market.
• C) each of the securities in the portfolio has more risk than an average security.
• D) the portfolio has 14 percent more risk than a risk-free security.
• E) the expected return on the portfolio is greater than the expected market return.

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Definitions:

Non-rational Factors

Elements that influence decision-making or behavior but are not based on logic or reasoning, such as emotions or traditions.

Political Ideologies

Systems of beliefs or ideologies that shape an individual's or group's political positions and strategies.

Widespread Problems

Issues or challenges that affect a large number of people or areas, often requiring comprehensive solutions.

Low Incidence

Refers to events or conditions that occur infrequently within a population or setting.