A Portfolio Consists of One Risky Asset and One Risk-Free

question 51

Multiple Choice

A portfolio consists of one risky asset and one risk-free asset. The risky asset has an expected return of 13.2 percent and a beta of 1.43. The risk-free asset has an expected return of 3.8 percent. How much of the portfolio is invested in the risk-free asset if the portfolio beta is 1.06?

• A) 26 percent
• B) 34 percent
• C) 42 percent
• D) 65 percent
• E) 74 percent

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Definitions:

Peer Relations

Refers to the interactions, relationships, and social connections that individuals have with their peers.

Predominant Characteristics

Refers to the most prominent or common features, traits, or attributes that distinguish a person, group, or thing.

Achievement Orientations

A concept in psychology that delineates how individuals attribute their successes and failures to different factors such as effort, ability, or external circumstances.

Peer Pressure

The influence exerted by a peer group, encouraging individuals to change their attitudes, values, or behaviors to conform to group norms.