Which of the following portfolios will have the highest beta?
A)Portfolio of U.S.Treasury bills
B)Portfolio of U.S.government bonds
C)Portfolio containing 50% U.S.Treasury bills and 50% U.S.government bonds
D)Portfolio of U.S.common stocks

Question

Quizplus · Accepted Answer

Among the given options, the portfolio of U.S. common stocks is expected to have the highest beta as common stocks are generally more volatile than government securities. Beta is a measure of the sensitivity of an asset's returns to the overall market returns. Therefore, a portfolio with a higher proportion of stocks is likely to have a higher beta as compared to a portfolio with a higher proportion of government securities.

Which of the Following Portfolios Will Have the Highest Beta