Exhibit 92
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider

question 13

Multiple Choice

Exhibit 9.2
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the three stocks, stock X, stock Y and stock Z, that have the following factor loadings (or factor betas) . $$\begin{array} { c c c } \text { Stock } & \text { Factor 1 Loading } & \text { Factor 2 Loading } \\\hline \mathrm { X } & - 0.55 & 1.2 \\\mathrm { Y } & - 0.10 & 0.85 \\\mathrm { Z } & 0.35 & 0.5\end{array}$$ The zero-beta return ( $\lambda$ ₀) = 3%, and the risk premia are $\lambda$ ₁ = 10%, $\lambda$ ₂ = 8%. Assume that all three stocks are currently priced at $50.
-Refer to Exhibit 9.2. Assume that you wish to create a portfolio with no net wealth invested. The portfolio that achieves this has 50% in stock X, -100% in stock Y, and 50% in stock Z. The weighted exposure to risk factor 2 for stocks X, Y, and Z are

• A)0.50, -1.0, 0.50
• B)-0.50, 1.0, -0.50
• C)0.60, -0.85, 0.25
• D)-0.275, 0.10, 0.175
• E)None of the above.

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Definitions:

Boycott

An organized refusal to buy, use, or engage with a company, country, or product as a form of protest.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, not based on cost differences but on consumers' willingness to pay.

Preference in Pricing

A practice where certain customers are offered better prices or terms than others, often based on the volume of business, loyalty, or strategic importance.

Clayton Act

A U.S. antitrust law aimed at promoting competition among businesses by prohibiting certain practices that restrict commerce.