Stock a Has a Beta of 1

question 47

Multiple Choice

Stock A has a beta of 1.2 and a standard deviation of 25%.Stock B has a beta of 1.4 and a standard deviation of 20%.Portfolio AB was created by investing in a combination of Stocks A and B.Portfolio AB has a beta of 1.25 and a standard deviation of 18%.Which of the following statements is CORRECT?

• A) Stock A has more market risk than Portfolio AB.
• B) Stock A has more market risk than Stock B but less stand-alone risk.
• C) Portfolio AB has more money invested in Stock A than in Stock B.
• D) Portfolio AB has the same amount of money invested in each of the two stocks.
• E) Portfolio AB has more money invested in Stock B than in Stock A.

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Definitions:

Trait Aggressiveness

A stable personality characteristic that predisposes individuals to engage in aggressive behaviors across a variety of situations.

Aggressiveness

The quality of being likely to attack or confront; characterized by or resulting from aggression.

Warrior Gene

A colloquial term for a variant of the MAOA gene that has been linked, controversially, to increased aggressiveness and risk-taking behaviors.

Serotonin

A neurotransmitter in the brain that plays key roles in regulating mood, appetite, and sleep, among other functions.