A Portfolio Contains Four Assets

question 45

Multiple Choice

A portfolio contains four assets. Asset 1 has a beta of.8 and comprises 30% of the portfolio. Asset 2 has a beta of 1.1 and comprises 30% of the portfolio. Asset 3 has a beta of 1.5 and comprises 20% of the portfolio. Asset 4 has a beta of 1.6 and comprises the remaining 20% of the portfolio. If the riskless rate is expected to be 3% and the market risk premium is 6%, what is the beta of the portfolio, the expected return on the portfolio and the market?

• A) 1.19; 6.57%; 6.00%
• B) 1.19; 7.14%; 6.00%
• C) 1.19; 10.14%; 9.00%
• D) 1.25; 10.50%; 6.00%
• E) 1.25; 10.50%; 9.00%

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Definitions:

Ethmoidal Sinus

Air cells within the ethmoid bone, part of the paranasal sinuses, located between the nose and the eyes.

Maxillary Sinus

Air-filled cavities located within the bone of the upper jaw, part of the paranasal sinuses.

Hyoid Bone

A U-shaped bone in the neck that supports the tongue and provides attachment points for neck and pharynx muscles, aiding in swallowing and speech.

Swallowing

The process by which food or liquid moves through the mouth, pharynx, and esophagus into the stomach.