A Friend Tells You About a Mutual Fund Called the Global

question 21

Multiple Choice

A friend tells you about a mutual fund called the Global Asset Fund. The fund's expected return and beta for next year are shown in the table below. The expected return and beta of the risk free asset and the market portfolio are also shown in the table. Consider an alternative investment strategy of investing in a portfolio on the Security Market Line with the same beta as the Global Asset Fund. What return should you expect to earn from that portfolio? $$\begin{array} { | c | c | c | } \hline \text { Asset } & \begin{array} { c } \text { Expected } \\\text { Return }\end{array} & \text { Beta } \\\hline \text { Risk-Free } & 5.5 \% & 0 \\\hline \begin{array} { c } \text { Market } \\\text { Portfolio }\end{array} & 11.5 \% & 1 \\\hline \begin{array} { c } \text { Global Asset } \\\text { Fund }\end{array} & 16 \% & 1.59 \\\hline\end{array}$$

• A)12%
• B)13%
• C)14%
• D)15%
• E)16%

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Definitions:

Integrated Pest Management

A sustainable approach to managing pests by combining biological, cultural, mechanical, and chemical controls to minimize environmental and health risks.

Ecological Approach

A perspective or method in environmental management and research focusing on the relationships between organisms and their environments, emphasizing holistic and systemic connections.

Aerial Spraying

The application of pesticides or other chemicals from aircraft to control pests, diseases, or vegetation over large areas efficiently.

Target Pest

A specific unwanted organism that pest control measures are aimed at eliminating or reducing, often to protect crops or human health.