Your Broker Mailed You Your Year-End Statement

question 78

Multiple Choice

Your broker mailed you your year-end statement. You have $25,000 invested in Amazon, $18,000 tied up in Boeing, $36,000 in Caterpillar stock, and $11,000 in DuPont. The betas for each of your stocks are 1.43 for Amazon, .79 for Boeing, 1.37 for Caterpillar, and 1.71 for DuPont. What is the beta of your portfolio?

• A) 1.33
• B) 1.31
• C) 1.00
• D) 5.30

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Definitions:

Taxable Entity

A business or individual that is required to pay taxes to a federal, state, or local government.

Permanent Difference

These are differences between taxable income and accounting income that originate in one period and do not reverse over time, affecting taxable income and tax liability.

Temporary Difference

A discrepancy between the tax base of an asset or liability and its carrying amount on the balance sheet that results in taxable or deductible amounts in future years.

Net Operating Loss Carryforward

This is a tax provision that allows a company to apply a tax year's net operating losses to future years' profits in order to lower tax liabilities.