Portfolio beta is used to measure the portfolio’s overall systematic risk of an investment which equals the weighted average of all individual stock’s beta coefficient in a portfolio. The amount of $120,000 invested in four stocks and its portfolio’s beta coefficient is equal to 0.8. The value of the stock which is to be sold is $48,000 and its beta coefficient is 1.

Question

A real estate broker insures an office building for $500,000 under a Building and Personal Property Coverage Form with a Causes of Loss-Broad Form attached. If smoke from a nearby industrial factory enters the office building and causes $10,000 in damage to the interior, the policy will pay a MAXIMUM of which of the following amounts? a. $0 b. $1,000 c. $5,000 d. $10,000

Answer 1

Question

Chapter 8, Problem 12PROB

Summary Introduction

Portfolio beta is used to measure the portfolio’s overall systematic risk of an investment which equals the weighted average of all individual stock’s beta coefficient in a portfolio.

The amount of $120,000 invested in four stocks and its portfolio’s beta coefficient is equal to 0.8. The value of the stock which is to be sold is $48,000 and its beta coefficient is 1.

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