The Beta of a Stock or Portfolio Is The

question 4

Multiple Choice

The beta of a stock or portfolio is the:

• A)ratio of its covariance with the returns of the tangency portfolio to the market risk premium of the market portfolio.
• B)ratio of its covariance with the returns of the tangency portfolio to the standard deviation of the tangency portfolio.
• C)ratio of its covariance with the returns of the tangency portfolio to the variance of the tangency portfolio.
• D)ratio of its correlation with the returns of the tangency portfolio to the standard deviation of the tangency portfolio.

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Definitions:

Gene-environment Correlation

A concept in behavioral genetics that suggests individuals’ genetic makeup influences their exposure to certain environments, which in turn affects their traits or behaviors.

Heredity

The genetic transmission of characteristics from parents to offspring, influencing various aspects of physical and psychological traits.

Surroundings

The environmental context or setting in which an individual or object is situated, influencing their experience and behavior.

Traits

Enduring characteristics or qualities that define an individual's behavior across different situations.