The Beta of an Efficient Portfolio

question 36

Multiple Choice

The beta of an efficient portfolio:

• A) must be 1 since an efficient portfolio is perfectly positively correlated with the market portfolio.
• B) is proportional to 1, depending on the proportion invested in the market portfolio.
• C) is equivalent to the portfolio's standard deviation, since standard deviation is the measure of risk for an efficient portfolio.
• D) is always less than 1.

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Definitions:

Willingness to Pay

Willingness to pay represents the maximum amount an individual is prepared to spend to acquire a good or service.

Marginal Cost

The boost in total charges linked to the creation of one more unit of a product or service.

Public Good

For the benefit of all society members, goods or services are offered at no cost, either by government agencies or private individuals or organizations, not with the aim of profit.

Civil Defense System

A civil defense system encompasses measures and responses designed to protect civilians and infrastructure from natural disasters, military attacks, or other emergencies.