An Investor Is Considering the Three Equities Given Below A
Equity B and C: Rp =

question 30

Essay

An investor is considering the three equities given below:
$\begin{array}{|l|l|l|}\hline\text { Equity } & \text { Expected Return } & \text { Beta } \\\hline \text { A } & 6.0 \% & -0.10 \\\hline \mathrm{B} & 13.3 \% & 2.10 \\\hline \mathrm{C} & 9.2 \% & 0.75 \\\hline \text { Market Portfolio } & 10.0 \% & 1.00 \\\hline \text { T-Bills } & 7.0 \% & 0.00 \\\hline\end{array}$
A.
Equity B and C: Rp = .5(13.3%)+ .5(9.2%)= 11.25%
Equity B and C: b p = .5(2.1)+ .5(0.75)= 1.425
Equity B and T-bills: b_B&TBILL = .5(2.1)+ .5(0)= 1.05
Equity's B and A: b_B&A = .5(2.1)+ .5(-0.1)= 1.00
C.Demonstrate that holding equity A actually reduces risk by comparing the risk of a portfolio equally weighted between equity B and T-Bills with a portfolio equally weighted between equity B and

---

Definitions:

Task Variety

Refers to the degree of different activities involved in a job, emphasizing the diversity of tasks and skills required.

Task Assignments

The distribution of specific duties or workloads to individuals or teams within an organization to achieve certain objectives.

Job Involvement

The degree to which an individual is emotionally and psychologically engaged in their job.

Individual

An individual refers to a single human being as distinct from a group, class, or family.