Question: ( Analyzing the security market line ) Your uncle just learned from his finandal advisor that his retiement portlolio has a beta of 1 f

(

Analyzing the security market line

)

Your uncle just learned from his finandal advisor that his retiement portlolio has a beta of

1

6 .

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

.

The value of the market portiolio rises by

9

percent.

.

The value of the market portliolio drops by

9

percent.

.

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

( Analyzing the security market line ) Your uncle

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