LeetQuiz Logo
Privacy Policy•contact@leetquiz.com
© 2025 LeetQuiz All rights reserved.
Financial Risk Manager Part 1

Financial Risk Manager Part 1

Get started today

Ultimate access to all questions.


A financial analyst is evaluating the beta coefficient for a portfolio comprised of large-cap utility firm stocks. The correlation coefficient between the returns of this portfolio and the returns of the benchmark index has been determined to be 0.7. Additionally, the volatility of the portfolio's returns is 6.5%, while the volatility of the benchmark's returns is 5.0%. Based on this information, what is the beta of the portfolio relative to the benchmark?

Exam-Like



Explanation:

D is correct. The following equation is used to calculate beta: β=ρ×σportfolioσbenchmark\beta = \rho \times \frac{\sigma_{\text{portfolio}}}{\sigma_{\text{benchmark}}}β=ρ×σbenchmark​σportfolio​​ where ρ\rhoρ represents the correlation coefficient and σ\sigmaσ the volatility.

Powered ByGPT-5