QUESTION 6

Part A: Which one of the following is the best example of unsystematic risk?

a.Inflation exceeding market expectations

b. A warehouse fire

c. Decrease in corporate tax rates

d. Decrease in the value of the dollar

e. Increase in consumer spending

Part B: An investor has a 2-stock portfolio with $50,000 invested in Herbert Manufacturing and $150,000 in Biggers Corporation. Herberts beta is 1.20 and Biggers beta is 1.00. What is the portfolio's beta?

		a. 1.050
		b. 1.075
		c. 1.100
		d. 1.125
		e. 1.200