company has only one project. Then The beta of their portfolio will be larger than the beta of the project, since the portfolio is not well diversified The beta of their portf
company has only one project. Then The beta of their portfolio will be larger than the beta of the project, since the portfolio is not well diversified The beta of their portf
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Consider an individual investing in just one company. Assume they own all the equity and all the debt of the company and that the company has only one project. Then
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The beta of their portfolio will be larger than the beta of the project, since the portfolio is not well diversified |
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The beta of their portfolio will be larger than the beta of the project, since one should adjust for leverage |
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The beta of their portfolio will be the same as the beta of the project |
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It is not possible to say whether the beta of their porfolio will be larger than, smaller than, or equal to the beta of the project |
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