Consider the Theory of Active Portfolio Management

question 67

Multiple Choice

Consider the theory of active portfolio management.Stocks A and B have the same beta and the same positive alpha.Stock A has higher nonsystematic risk than stock B. You should want __________ in your active portfolio.

• A) equal proportions of stocks A and B
• B) more of stock A than stock B
• C) more of stock B than stock A
• D) more information is needed to answer this question

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Definitions:

Market Price

The present cost at which a product or service is available for purchase or sale in a market.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace.

Output

Refers to the total quantity of goods or services produced by an individual, company, or economy.