How Does an Investor Earn More Than the Return Generated

question 3

Multiple Choice

How does an investor earn more than the return generated by the tangency portfolio and still stay on the security market line?

• A) Borrow at the risk free rate and invest in the tangency portfolio.
• B) Add high risk/return assets to the portfolio.
• C) Adjust the weight of stock in the portfolio to include more high return stocks.
• D) It cannot be done.

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Definitions:

Computer Aided Decision Making (CADM)

The use of computer systems to support or enhance the decision-making processes.

Group Decision Support Systems (GDSS)

Computer-based systems designed to aid groups in making decisions, particularly complex decisions that require the synthesis of multiple inputs and viewpoints.

Electronic Brainstorming (EBS)

A method of brainstorming that uses electronic devices and platforms to gather ideas and solutions from participants in different locations, enhancing creativity and participation.

Distributive Justice

A principle concerned with the fair allocation of resources among individuals or groups in a society.