Portfolio A is a well-diversified portfolio that is equally-weighted among 6,000 different and diverse stocks. Portfolio A has an average amount of systematic risk, so it has the same amount of systematic risk as the market portfolio. Portfolio B consists of 2 stocks that operate in the real estate industry: 603 shares of Downtown Real Estate stock, which has a price of $12.84 per share and a beta of 1.07; and 332 shares of Uptown Real Estate stock, which has a price of $18.49 per share and a beta of 0.62. All stocks have some unsystematic risk and all stocks have the same level of unsystematic risk. Which one of the following assertions is most likely to be true? O Portfolio A has more systematic risk than portfolio B, and portfolio B has more unsystematic risk than portfolio A 00 Portfolio A has more systematic risk than portfolio B, and portfolio A more unsystematic risk than portfolio B Portfolio A either has the same amount of systematic risk as portfolio B or portfolio A has the same amount of unsystematic risk as portfolio B, or portfolio A has the same amount of systematic risk and unsystematic risk as portfolio B Portfolio B has more systematic risk than portfolio A, and portfolio B has more unsystematic risk than portfolio A ○ Portfolio B has more systematic risk than portfolio A, and portfolio A has more unsystematic risk than portfolio B
Portfolio A is a well-diversified portfolio that is equally-weighted among 6,000 different and diverse stocks. Portfolio A has an average amount of systematic risk, so it has the same amount of systematic risk as the market portfolio. Portfolio B consists of 2 stocks that operate in the real estate industry: 603 shares of Downtown Real Estate stock, which has a price of $12.84 per share and a beta of 1.07; and 332 shares of Uptown Real Estate stock, which has a price of $18.49 per share and a beta of 0.62. All stocks have some unsystematic risk and all stocks have the same level of unsystematic risk. Which one of the following assertions is most likely to be true? O Portfolio A has more systematic risk than portfolio B, and portfolio B has more unsystematic risk than portfolio A 00 Portfolio A has more systematic risk than portfolio B, and portfolio A more unsystematic risk than portfolio B Portfolio A either has the same amount of systematic risk as portfolio B or portfolio A has the same amount of unsystematic risk as portfolio B, or portfolio A has the same amount of systematic risk and unsystematic risk as portfolio B Portfolio B has more systematic risk than portfolio A, and portfolio B has more unsystematic risk than portfolio A ○ Portfolio B has more systematic risk than portfolio A, and portfolio A has more unsystematic risk than portfolio B
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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Transcribed Image Text:Portfolio A is a well-diversified portfolio that is equally-weighted among 6,000 different and diverse stocks. Portfolio A has an average amount of systematic
risk, so it has the same amount of systematic risk as the market portfolio. Portfolio B consists of 2 stocks that operate in the real estate industry: 603 shares of
Downtown Real Estate stock, which has a price of $12.84 per share and a beta of 1.07; and 332 shares of Uptown Real Estate stock, which has a price of $18.49
per share and a beta of 0.62. All stocks have some unsystematic risk and all stocks have the same level of unsystematic risk. Which one of the following
assertions is most likely to be true?
O Portfolio A has more systematic risk than portfolio B, and portfolio B has more unsystematic risk than portfolio A
00
Portfolio A has more systematic risk than portfolio B, and portfolio A more unsystematic risk than portfolio B
Portfolio A either has the same amount of systematic risk as portfolio B or portfolio A has the same amount of unsystematic risk as portfolio B, or portfolio A has
the same amount of systematic risk and unsystematic risk as portfolio B
Portfolio B has more systematic risk than portfolio A, and portfolio B has more unsystematic risk than portfolio A
○ Portfolio B has more systematic risk than portfolio A, and portfolio A has more unsystematic risk than portfolio B
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