You Would Like to Combine a Risky Stock with a Beta

question 1

Multiple Choice

You would like to combine a risky stock with a beta of 1.5 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) 25%
• B) 33%
• C) 50%
• D) 67%
• E) 75%

---

Definitions:

Formal Operational Thought

A stage in cognitive development, as proposed by Piaget, characterized by the ability to think abstractly, logically, and systematically.

Postconventional Morality

A stage of moral development in which individuals make decisions based on universal ethical principles and inner conscience, beyond societal norms.

Collectivist

Relating to the practice or principle of giving a group priority over each individual in it.

Conventional

Adhering to accepted standards and norms of behavior or thought; often contrasted with unconventional or creative approaches.