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:

Proximity

In psychology, the closeness or physical distance between people that significantly affects attraction and relationship formation; in visual perception, a principle that elements close to one another are perceived as a coherent group.

Physical Attractiveness

The degree to which a person's physical features are considered aesthetically pleasing or beautiful by others.

Similarity

The degree to which two or more things resemble each other in terms of attributes, characteristics, or qualities.

Fundamental Attribution Error

The tendency to overemphasize personality traits and underestimate situational factors when explaining others' behaviors.