An investor prefers to invest in companies that have high fixed costs. How can this be accomplished if the investor also requires a portfolio beta of 1.0?
A) Invest 50% in cyclical stocks and 50% in firms with high fixed costs
B) Invest 50% in a market index fund and 50% in firms with high fixed costs
C) Invest equally in cyclical stocks, stocks of high-fixed-cost firms, and U.S. Treasury bills
D) Invest a portion of the portfolio in U.S. Treasury securities
Correct Answer:
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