Julie wants to create a $5,000 portfolio. She also wants to invest as much as possible in a high-risk stock with the hope of earning a high rate of return. However, she wants her portfolio to have no more risk than the overall market. Which one of the following portfolios is most apt to meet all her objectives? A. Invest the entire $5,000 in a stock with a beta of 1.0. B. Invest $2,500 in a stock with a beta of 1.98 and $2,500 in a stock with a beta of 1.0. C. Invest $2,500 in a risk-free asset and $2,500 in a stock with a beta of 2.0
Julie wants to create a $5,000 portfolio. She also wants to invest as much as possible in a high-risk stock with the hope of earning a high rate of return. However, she wants her portfolio to have no more risk than the overall market. Which one of the following portfolios is most apt to meet all her objectives? A. Invest the entire $5,000 in a stock with a beta of 1.0. B. Invest $2,500 in a stock with a beta of 1.98 and $2,500 in a stock with a beta of 1.0. C. Invest $2,500 in a risk-free asset and $2,500 in a stock with a beta of 2.0
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter2: Risk And Return: Part I
Section: Chapter Questions
Problem 15MC
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Julie wants to create a $5,000 portfolio. She also wants to invest as much as possible in a high-risk stock with the hope of earning a high rate of return. However, she wants her portfolio to have no more risk than the overall market. Which one of the following portfolios is most apt to meet all her objectives? A. Invest the entire $5,000 in a stock with a beta of 1.0. B. Invest $2,500 in a stock with a beta of 1.98 and $2,500 in a stock with a beta of 1.0. C. Invest $2,500 in a risk-free asset and $2,500 in a stock with a beta of 2.0 |
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