You Are Thinking About Purchasing 1,000 Shares of Stock in the Following

question 67

Multiple Choice

You are thinking about purchasing 1,000 shares of stock in the following firms: Number of Shares Firm's Beta
Firm A 100 0.75
Firm B 200 1.47
Firm C 200 0.82
Firm D 600 1.60
If you purchase the number of shares specified, then the beta of your portfolio will be

• A) 1.16.
• B) 1.35.
• C) 1.00.
• D) Cannot be determined without knowing the stock prices.

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Definitions:

GDP Deflator

An indicator used to determine the price levels of newly produced domestic final goods and services, assisting in the conversion of nominal GDP to real GDP.

Real GDP

Gross Domestic Product corrected for inflation, giving a truer depiction of the size of an economy and its growth trajectory over time.

Nominal GDP

The gross domestic product calculated at current market prices, without adjusting for inflation.

Transfer Payments

Payments made by the government to individuals or other entities without the government receiving any goods or services in return, such as welfare benefits or social security.