Your Portfolio Has a Beta of 1

question 71

Multiple Choice

Your portfolio has a beta of 1.18 and consists of 15 percent U.S.Treasury bills,30 percent Stock A,and 55 percent Stock B.Stock A has a risk level equivalent to that of the overall market.What is the beta of Stock B?

• A).55
• B)1.10
• C)1.24
• D)1.40
• E)1.60

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Definitions:

Maturity Value

The amount to be received at the maturity of a financial instrument, typically including both the principal and interest.

Calculating Interest

The process of determining the interest payment on a loan or investment, based on the principal amount, rate, and time.

Dishonored Note

A promissory note that has not been paid by the maker at its maturity date, resulting in a default.

Journalize Entry

The act of recording a transaction in the accounting journal as part of the bookkeeping process.