Suppose You Are Working with Two Factor Portfolios, Portfolio 1

question 24

Multiple Choice

Suppose you are working with two factor portfolios, portfolio 1 and portfolio 2.The portfolios have expected returns of 15% and 6%, respectively.Based on this information, what would be the expected return on well-diversified portfolio A, if A has a beta of 0.80 on the first factor and 0.50 on the second factor? The risk-free rate is 3%.

• A)15.2%
• B)14.1%
• C)13.3%
• D)10.7%

---

Definitions:

Subjective Probability

An individual's personal judgment or belief about how likely an event is to occur, not based on statistical data.

Pre-Registered Attendees

Refers to individuals who have signed up to attend an event or conference before the actual date, ensuring their participation and sometimes benefiting from early registration advantages.

Shoes For Crews

A footwear company specializing in slip-resistant shoes designed for workplace safety in environments where spills and wet floors are common.

Slips And Falls

Slips And Falls describe accidents where individuals lose their footing or balance, resulting in a fall that can lead to injuries, commonly occurring in both public and workplaces.