What Is the Beta of a Portfolio If 20 Percent

question 37

Multiple Choice

What is the beta of a portfolio if 20 percent of the funds are invested in Stock A with a beta of 2,30 percent in Stock B with a beta of 0.8,15 percent in Stock C with a beta of 2.2,and the remainder in Stock D with a beta of 1.4?

• A) 1.23
• B) 1.46
• C) 1.74
• D) 1.98

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Definitions:

Surplus

A situation where the quantity of a good or service supplied exceeds the quantity demanded at the current price.

Substitution Effect

The economic concept that as prices rise (or incomes decrease), consumers will replace more expensive items with cheaper alternatives, holding utility constant.

Relative Price

Relative price is the price of one good or service compared to another, essentially indicating the trade-off between choosing one over the other.

Price Increases

Price Increases involve a rise in the cost of goods or services over time, often measured by inflation rates.