You hold a $400 million portfolio of 30 large stocks in various sectors within the S&P500. You are considering switching some of this into stock in a listed shell company (a company whose only assets are cash). In terms of minimising your overall systematic portfolio risk measured by the weighted beta of your portfolio, which option is the most likely to reduce your portfolio’s systematic risk?（No information missing） a Reallocating $50m into the shell company. b I do not want to answer this question. c Reallocating $25m into the shell company and $25m into airline stocks. d Reallocating $50 million into airline stocks. e Remaining fully invested in the S&P500. f Reallocating $100m into airlines stocks.
You hold a $400 million portfolio of 30 large stocks in various sectors within the S&P500. You are considering switching some of this into stock in a listed shell company (a company whose only assets are cash). In terms of minimising your overall systematic portfolio risk measured by the weighted beta of your portfolio, which option is the most likely to reduce your portfolio’s systematic risk?（No information missing） a Reallocating $50m into the shell company. b I do not want to answer this question. c Reallocating $25m into the shell company and $25m into airline stocks. d Reallocating $50 million into airline stocks. e Remaining fully invested in the S&P500. f Reallocating $100m into airlines stocks.
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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You hold a $400 million portfolio of 30 large stocks in various sectors within the S&P500. You are considering switching some of this into stock in a listed shell company (a company whose only assets are cash). In terms of minimising your overall systematic portfolio risk measured by the weighted beta of your portfolio, which option is the most likely to reduce your portfolio’s systematic risk?（No information missing）
- a
Reallocating $50m into the shell company.
- b
I do not want to answer this question.
- c
Reallocating $25m into the shell company and $25m into airline stocks.
- d
Reallocating $50 million into airline stocks.
- e
Remaining fully invested in the S&P500.
-
fReallocating $100m into airlines stocks.
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