A Portfolio Consists of Two Stocks and Has a Beta

question 41

Multiple Choice

A portfolio consists of two stocks and has a beta of 1.07.The first stock has a beta of 1.48 and comprises 38 percent of the portfolio.What is the beta of the second stock?

• A).41
• B).66
• C).82
• D)1.28
• E)1.35

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Definitions:

Sinking Fund

A fund of deposits made by the issuer of a corporate or government bond and managed by a neutral third party in order to ultimately pay off a bond.

Compounded Quarterly

The calculation of interest where the amount is added to the principal every quarter, influencing the total interest accrued over time.

Highway Construction

The process of building roads that allow for faster and more efficient transportation over long distances, often involving large-scale public works projects.

Compounded Quarterly

Interest calculation method where interest is added to the principal sum four times a year.