Use the Following Information to Answer the Question(s)below

question 8

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%.Security "X" goes up on average by 29% when the market goes up and goes down by 11% when the market goes down.Security "Y" goes down on average by 16% when the market goes up and goes up by 16% when the market goes down.Security "Z" goes up on average by 4% when the market goes up and goes up by 4% when the market goes down.
-The expected return on security with a beta of 0 is closest to:

• A)-4.0%.
• B)0.0%.
• C)3.2%.
• D)4.0%.

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Definitions:

Production Possibilities

The various combinations of goods and services that an economy can produce, given its technological capabilities and available resources.

Comparative Advantage

The ability of an individual, firm, or country to produce a good or service at a lower opportunity cost than competitors, leading to specialized production and trade benefits.

Specialization

The process in which individuals, firms, or countries focus on producing a narrow range of goods or services to gain greater efficiencies and increase productivity.

Production Possibilities Curves

A graph that depicts the maximum potential output of one good for a given amount of output for another, assuming full efficiency and fixed resources.