Assume That Two Investors Each Hold a Portfolio, and That

question 74

True/False

Assume that two investors each hold a portfolio, and that portfolio is their only asset.Investor A's portfolio has a beta of minus 2.0, while Investor B's portfolio has a beta of plus 2.0.Assuming that the unsystematic risks of the stocks in the two portfolios are the same, then the two investors face the same amount of risk.However, the holders of either portfolio could lower their risks, and by exactly the same amount, by adding some "normal" stocks with beta = 1.0.

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Definitions:

Color-Blindness

An ideology that suggests racial differences do not matter and should not be taken into account, often criticized for ignoring systemic inequalities and racism.

Cosmopolitanism

An ideology that all human beings belong to a single community, based on a shared morality, regardless of geographic, political, or cultural boundaries.

Color-Blindness

An ideology that proposes the best way to end discrimination is by treating individuals as equally as possible, without regard to race, culture, or ethnicity, which critics argue ignores systemic inequalities.

Multicultural Framework

A conceptual model that emphasizes understanding, appreciating, and integrating diverse cultural perspectives and practices.