Suppose You Held a Well-Diversified Portfolio with a Very Large

question 20

Multiple Choice

Suppose you held a well-diversified portfolio with a very large number of securities,and that the single index model holds.If the β of your portfolio was 0.14 and β_Mwas 0.19,the β of the portfolio would be approximately ________.

• A)0.74
• B)0.80
• C)1.25
• D)1.56
• E)none of the above

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Definitions:

Assignable

A quality of a contract or right that allows it to be transferred from one party to another.

Third Party Rights

Rights that are granted to individuals or entities who are not a direct party to a contract or legal agreement but are affected by its provisions.

Delegation

The act of transferring to another person the authority to perform a particular task or function.

Assignment

The transfer of rights, duties, or interests from one party to another.