You Would Like to Combine a Highly Risky Stock with a Beta

question 66

Multiple Choice

You would like to combine a highly risky stock with a beta of 2.6 with U.S.Treasury bills in such a way that the risk level of the portfolio is equivalent to the risk level of the overall market.What percentage of the portfolio should be invested in Treasury bills?

• A)57.91 percent
• B)61.54 percent
• C)50.00 percent
• D)38.46 percent
• E)42.09 percent

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Definitions:

Water Meter

A device installed to measure the volume of water usage in residential, commercial, or industrial properties.

Meter Reading

The process of recording the amount of electricity, gas, water, or other utilities consumed by a household or business.

Thousand Cubic Feet

A unit of measure used primarily in the United States for volume, often in reference to the consumption or production of natural gas.

Natural Gas

A fossil fuel used as a source of energy for heating, cooking, and electricity generation, composed mostly of methane.