You Own an Equally-Weighted Portfolio Consisting of a Stock and Treasury

question 102

Multiple Choice

You own an equally-weighted portfolio consisting of a stock and Treasury bills. You sell a portion of the Treasury bills, and invest in Stock M, which has a positive covariance with the market. The beta of your portfolio will:

• A) increase.
• B) decrease.
• C) remain the same.
• D) increase or decrease.
• E) decrease or remain the same.

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Definitions:

Genetic Differences

Variation in the DNA sequences among individuals or populations, which can influence traits, disease susceptibility, and adaptation to environmental changes.

Environmental Adaptation

The method through which living beings adapt to changes in their existing surroundings or new habitats, improving their chances of survival and reproduction.

Adaptive Value

The extent to which a trait or behavior increases the likelihood of survival and reproduction of an organism within a specific environment.

Evolutionary History

The branch of biology that deals with the study of the evolutionary processes that have shaped diversity and complexity of life on Earth over time.