Which of the following statement is FALSE 1 In a welldiversi

Which of the following statement is FALSE 1) In a well-diversified portfolio, an investor is compensated for systematic risk only 2) All correctly priced securities have the same reward-to-risk ratio A portfolio equally divided between Treasury securities and the market index should have a beta equal to 1. 3) 4) A decrease in consumer spending is an example of systematic risk

Solution

correct opion is \" 3 \"

Treasury securities is a risk free security so its beta is 0 whereas market index has a beta of 1

so beta of portfolio = [0*.50 ] +[1*.50]     since equally weighted

             = 0+ .50

             = .50

The statement is false ,it will have a beta of 1