Assume That as a Portfolio Manager the Beta of Your

question 19

Multiple Choice

Assume that as a portfolio manager the beta of your portfolio is 0.85 and that your performance is exactly on target with the SML data under condition 1. If the true SML data is given by condition 2, how much does your performance differ from the true SML?

• A)1.33% higher
• B)2.35% lower
• C)8% lower
• D)1.33% lower
• E)2.35% higher

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Definitions:

First-degree Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed, tailored to the buyer's willingness to pay.

Incremental Revenue

The additional income received from selling one more unit of a product or service.

Marginal Revenue

The additional income received from selling one more unit of a good or service; it is a critical concept in deciding the optimal quantity of goods to produce.

Price Discrimination

The practice of charging different prices to different consumers for the same product or service, based on their willingness to pay.