If Arbitrage Opportunities Are to Be Ruled Out, Each Well-Diversified

question 11

Multiple Choice

If arbitrage opportunities are to be ruled out, each well-diversified portfolio's expected excess return must be

• A) inversely proportional to the risk-free rate.
• B) inversely proportional to its standard deviation.
• C) proportional to its weight in the market portfolio.
• D) proportional to its standard deviation.
• E) proportional to its beta coefficient.

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Definitions:

Company

A business is a lawful entity established by several people to run and manage a commercial or industrial enterprise.

Manufacturing Cycle Efficiency (MCE)

A metric that identifies the proportion of total manufacturing cycle time that is value-added, aiming to improve process efficiency.

Custom Home Elevators

Elevators that are specifically designed and built to fit the unique requirements of a residential home.

Investment Opportunity

An asset or item that has the potential to generate revenue or appreciate in value, offering a return on the investment.