Quiz Ch 08 – T/F Portfolio Beta and Risk Equivalence
Fundamentals of Financial Management, Concise
Brigham and Houston
09th Edition
True or false: If two investors possess single portfolios, and assume equal unsystematic risks for stocks in both portfolios, Investor A’s portfolio with a beta of -2.0 and Investor B’s portfolio with a beta of +2.0 encounter identical levels of risk. Nevertheless, holders of either portfolio can decrease their risks by the same degree by incorporating “normal” stocks with a beta of 1.0.