Exhibit 85
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 26

Short Answer

Exhibit 8.5
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) $$\begin{array} { c c c } \text { Portfolio } & \text { Expected Return } & \text { Standard Deviation } \\\hline \text { A } & 9.8 \% & 14.0 \% \\\text { B } & 6.7 \% & 9.8 \% \\\text { C } & 11.2 \% & 18.5 \%\end{array}$$
-Refer to Exhibit 8.5. Calculate the risk premium per unit of risk for the three portfolios above assuming the risk-free rate is 4.0%. $\begin{array}{llll}&A&B&C\\\text { a. } & 0.068 & 0.027 & 0.072 \\\text { b. } & 0.414 & 0.276 & 0.389 \\\text { c. } & 0.700 & 0.680 & 0.605 \\\text { d. } & 0.300 & 0.280 & 0.205 \\\text { e. } & 0.650 & 0.580 & 0.480\end{array}$

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Definitions:

Law

A system of rules that are created and enforced through social or governmental institutions to regulate behavior and maintain order in a society.

Suspect Classification

A legal term referring to a discriminatory classification of individuals or groups that is subject to strict scrutiny in court, often based on race, religion, or national origin.

Strict Scrutiny

The highest level of judicial review used by courts to evaluate the constitutionality of laws, requiring a law to serve a compelling state interest and be narrowly tailored to achieve its goal.

Judicial Review

The power of courts to assess the constitutionality of laws and government actions and to invalidate them if they conflict with the Constitution.