John has a portfolio consisting of equal proportions of 5 securities.Susan also has a portfolio of the same five securities but the weights of each security are not equal.Which of the statements below MUST be TRUE?
A)Because Susan has an unequal distribution of securities,her portfolio beta must be less than John's.
B)Without additional information,we cannot be certain whose portfolio beta is greater.
C)Because Susan has an unequal distribution of securities,her portfolio beta must be greater than John's.
D)Because the portfolios contain the same securities,the beta of each portfolio must be the same.

Question

Quizplus · Accepted Answer

The weights of the securities in Susan's portfolio may result in a higher, lower or equal beta compared to John's portfolio. Without knowing the actual weights and betas of the securities, we cannot determine whose portfolio beta is greater.

John Has a Portfolio Consisting of Equal Proportions of 5