Assume You Own a Portfolio of Diverse Securities Which Are

question 59

Multiple Choice

Assume you own a portfolio of diverse securities which are each correctly priced.Given this, the reward-to-risk ratio:

• A)for the portfolio must equal 1.0.
• B)for the portfolio must be less than the market risk premium.
• C)for each security must equal zero.
• D)of each security is equal to the risk-free rate.
• E)of each security must equal the slope of the security market line.

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Definitions:

Land Cultivation

The process of preparing land for growing crops, including plowing, applying fertilizers, and managing weeds.

Farmers

Individuals who engage in agriculture, raising living organisms for food or raw materials, primarily working on farms or in the agricultural sector.

Income Elasticity

A measure of how much the demand for a good or service changes in response to a change in the consumer's income.

Inferior Good

A type of good for which demand decreases as the income of the consumer increases, opposite to normal goods.