The Market Is Expected to Generate a 12% Return and the Risk

question 82

Multiple Choice

The market is expected to generate a 12% return and the risk free rate is 4%. A portfolio manager has 70% of her capital allocated to stock A with a beta of 0.8, which generated a total return of 11%. 30% of her capital is allocated to stock B with a beta of 1.1, which generated a total return of 12%. What Alpha was generated by the manager by allocating more capital to stock A?

• A) 0.11%
• B) 0.18%
• C) 0.25%
• D) 0.38%

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Definitions:

Multivariable Account Segmentation

A marketing approach that divides a market into subgroups based on multiple factors such as customer needs, demographics, and behavioral traits, allowing for targeted marketing strategies.

Dual Segmentation Marketing

A marketing strategy that involves dividing the market into two parts based on differing criteria to better target specific groups of consumers.

Sales Volume

The total number of units of a product or service sold over a specific period of time. It is a measure of a company's sales performance and market demand.

80/20 Principle

A principle suggesting that 80% of effects come from 20% of causes, often applied to business, productivity, and economics contexts.