You Want Your Portfolio Beta to Be 1

question 10

Multiple Choice

You want your portfolio beta to be 1.20. Currently, your portfolio consists of $100 invested in stock A with a beta of 1.4 and $300 in stock B with a beta of.6. You have another $400 to invest and want to divide it between an asset with a beta of 1.6 and a risk-free asset. How much should you invest in the risk-free asset?

• A) $0
• B) $140
• C) $200
• D) $320

---

Definitions:

Reticular Formation

A network of nerves in the brainstem that plays a key role in controlling arousal and alertness.

Afferent Neurons

Neurons that transmit messages from sensory receptors to the spinal cord and brain; also called sensory neurons.

Efferent Neurons

Neurons that transmit messages from the brain or spinal cord to muscles and glands; also called motor neurons.

Glial Cells

Non-neuronal cells in the central and peripheral nervous systems that support and protect neurons.