The Following Information Regarding a Portfolio of Two Stocks Are

question 233

Multiple Choice

The following information regarding a portfolio of two stocks are given: w₁ = .65,w₂ = .35,E(R₁) = .12,and E(R₂) = .14.Which of the following regarding the portfolio expected return,E(R_p) ,is correct?

• A).260
• B).127
• C).346
• D).374

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Definitions:

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for competition based on quality, price, and branding.

Long-run Equilibrium

A state in which all firms in a competitive market are making just enough profit to stay in business, with no incentive to enter or leave the market.

MR = MC

A condition where a firm's marginal revenue (MR) equals its marginal cost (MC), commonly used to determine the profit-maximizing level of output.

ATC

Stands for Average Total Cost, which is the cost per unit of output, calculated by dividing the total cost by the quantity produced.