Portfolio risk can be broken down into two types. Diversifable risk is that part of a security's risk associated with random events. It diversification and is also known as company-specific risk. On the other hand, market risk is the risk that remains in a portfolio eliminated all company-specific risk. Standard deviation is not a good measure of risk when a stock is held in a portfolio. A stock's relev remains once a stock is in a diversified portfolio. Its contribution to the portfolio's market risk is measured by a stock's beta coefficient extent to which a given stock's returns move up and down with the stock market. An average stock's beta is equal to 1 because that tends to move up and down in step with the general market. A stock with a beta greater than 1 is considered to have high risk, less than 1 is considered to have low risk. Quantitative Problem: You are holding a portfolio with the following investments and betas: Stock Dollar Investment Beta B $300,000 1.15 150,000 1.60 500,000 0.70 D 50,000 -0.15 Total investment $1,000,000 The market's required return is 11% and the risk-free rate is 4%. What is the portfolio's required return? Do not round intermediate cal to three decimal places. % Grade it Now Save & Continue Continue without saving