Your father just learned from his financial advisor that his retirement portfolio has a beta of

1.82.

He has turned to you to explain to him what this means. Specifically, describe what you would expect to happen to the value of his retirement fund if the following were to occur:

a.The value of the market portfolio rises by

8

percent.

b.The value of the market portfolio drops by

8

percent.

c.Is your father's retirement portfolio more or less risky than the market portfolio? Explain.