A Portfolio Is Comprised of Five Securities That Have Individual

question 7

Multiple Choice

A portfolio is comprised of five securities that have individual betas of 1.38,.87,1.02,1.49,and .67.You do not know the portfolio weight of each security.What do you know with certainty?

• A)The portfolio beta will not be affected by any change in the portfolio weights.
• B)The portfolio beta will not change if an additional security with a beta of 1 is added to the portfolio.
• C)The portfolio beta will be greater than the market beta.
• D)The portfolio beta will be less than 1.49 and greater than .67.
• E)The optimal portfolio beta for any investor must be greater than 0 and less than 1.

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Definitions:

Internal Threads

The threads located within a hole or bore, allowing for the screwing in of a mating part with external threads.

Tap

A tool used to cut internal threads into a hole, creating a surface that can accommodate a screw or bolt.

American Society of Mechanical Engineers

A professional association that sets engineering standards, focusing on mechanical engineering.

ASME

American Society of Mechanical Engineers, a professional association that sets codes and standards for engineering practices, especially concerning mechanical engineering.