You Are Considering a Portfolio of Three Stocks with 30

question 29

Multiple Choice

You are considering a portfolio of three stocks with 30% of your money invested in company X, 45% of your money invested in company Y, and 25% of your money invested in company Z. If the betas for each stock are 1.22 for company X, 1.46 for company Y, and 1.03 for company Z, what is the portfolio beta?

• A) 1.24
• B) 1.00
• C) 1.28
• D) 1.33

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Definitions:

Coercive Power

A form of power that is based on the ability to deliver punishments or impose penalties on others.

Expert Power

The influence or authority derived from having specialized knowledge or expertise in a particular area.

Reward Power

Reward power is the capacity to influence others' behavior by controlling the allocation of rewards or benefits.

Countervailing Power

The ability of one group to offset the power or influence of another group, often used in contexts where there is a power imbalance, such as in labor relations.