You Invest $200 in Security a with a Beta of 1.4

question 48

Multiple Choice

You invest $200 in security A with a beta of 1.4 and $800 in security B with a beta of 0.3. The beta of the resulting portfolio is

• A) 1.40.
• B) 1.00.
• C) 0.52.
• D) 1.08.
• E) 0.80.

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Definitions:

Excess Supply of Money

A situation where the quantity of money available in the economy surpasses the demand for it, potentially leading to inflation.

Interest Rates

The cost of borrowing money, expressed as a percentage of the total amount of the loan, usually on an annual basis.

Investment

The allocation of resources, typically money, in order to gain profitable returns, as interest, income, or appreciation in value.

Federal Funds Target Rate

The interest rate at which banks and credit unions lend reserve balances to other depository institutions overnight, set by the Federal Reserve to influence economic conditions.