A Portfolio Contains 3 Stocks with Expected Returns of 12

question 64

Multiple Choice

A portfolio contains 3 stocks with expected returns of 12%, 15%, and 9%, with corresponding weights of 30%, 35%, and 35%, respectively. What is the expected return of the portfolio?

• A) 12%
• B) 13%
• C) 14%
• D) 15%

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Definitions:

Negative Excess Reserves

A situation where banks have less reserves than the required minimum, potentially leading to liquidity problems.

Federal Funds Market

The Federal Funds Market is a financial market that allows banks to borrow or lend excess reserves to each other on an overnight basis, with interest rates known as the federal funds rate.

Required Reserves

The minimum amount of funds that a bank must hold in reserve against deposit liabilities, as mandated by central banking authorities.

Open Market Sale

The selling of government bonds to the public or banks by the central bank to control the money supply.