You Invest 50% of Your Money in Security a with a Beta

question 32

Multiple Choice

You invest 50% of your money in security A with a beta of 1.6 and the rest of your money in security B with a beta of 0.7. The beta of the resulting portfolio is

• A) 1.40.
• B) 1.15.
• C) 0.36.
• D) 1.08.
• E) 0.80.

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Definitions:

Criterion-related Validity

The extent to which a measure is associated with an external criterion or outcome, assessing the test's predictive or concurrent accuracy.

Content Validity

The extent to which a test measures all aspects of the concept it intends to measure.

Criterion-related Reliability

A measure of how well a test predicts or correlates with a specific outcome or behavior, used to assess the validity of the test for specific purposes.

Construct Validity

The extent to which a test or instrument measures the theoretical concept or construct that it is intended to measure.