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:

Property

Refers to legally owned items or assets, including real estate, personal items, and intellectual property.

Compensation

Payment or benefit given to someone, often as a reparation for loss, injury, or suffering.

Private Property

Property owned by individuals or corporations rather than by the government or the public.

Individual

A single human being as distinct from a group, class, or family.