QUESTION 31

1. The beta of Portfolio A is 1.5. The standard deviation of the returns on the market index is 20%. Changes in the market account for 64% of the changes in Portfolio A. The standard deviation of returns on the active portfolio is closest to:

   		a. 25.00%.
   		b. 31.75%.
   		c. 37.50%.
   		d. 46.88%.

QUESTION 32

1. An aggressive stock mutual fund would have a beta that is most likely:

   		a. Equal to zero.
   		b. Greater than one.
   		c. Equal to one.
   		d. Less than one.