The Beta of an Active Portfolio Is 1

question 5

Multiple Choice

The beta of an active portfolio is 1.20. The standard deviation of the returns on the market index is 20%. The nonsystematic variance of the active portfolio is 1%. The standard deviation of the returns on the active portfolio
Is

• A) 3.84%.
• B) 5.84%.
• C) 19.60%.
• D) 24.17%.
• E) 26.0%.

---

Definitions:

Unrealistically Positive

An overly optimistic perspective or assessment that may not accurately reflect reality or take into account potential negative outcomes.

Effortful Control

The ability to regulate one's emotions and actions through consciously exerted control.

Impulsive Actions

Behaviors that are performed quickly without careful thought or planning, often as a result of spontaneous desires or emotions.

Development of the Ego

The process through which an individual's sense of self or identity emerges and evolves, influenced by psychological, social, and biological factors.