You Own Three Stocks Which Have Betas of 1

question 43

Multiple Choice

You own three stocks which have betas of 1.16,1.34,and 1.02.You would like to add a fourth security such that your portfolio beta will match that of the market.Given this situation,the new security:

• A) must have a beta of 1.0.
• B) must have a beta of zero.
• C) could be a U.S. Treasury bill.
• D) could have any beta greater than 1.0.
• E) must have a portfolio weight of 50 percent or more.

---

Definitions:

Direct Expenses

Costs that can be directly attributed to a specific product, service, or project, such as raw materials and labor.

Net Loss

A net loss occurs when a company's total expenses exceed its total revenues during a specific accounting period, indicating a negative financial performance.

Export Cost

Expenses associated with sending goods or services to another country for sale or trade.

Variable Manufacturing Costs

Costs that vary directly with the level of production output, including expenses like raw materials and hourly labor costs.