Use Inductive Reasoning to Predict the Next Line in the Pattern

question 61

Multiple Choice

Use inductive reasoning to predict the next line in the pattern.
- $$\begin{array} { l } ( 5 \times 1 ) \times ( 2 \times 1 ) = 10 \\( 5 \times 10 ) \times ( 2 \times 2 ) = 200 \\( 5 \times 100 ) \times ( 2 \times 3 ) = 3000\end{array}$$

• A) (5 × 1000) × (2 × 4) = 35,000
• B) (5 × 1000) × (2 × 4) = 45,000
• C) (5 × 1000) × (2 × 4) = 4000
• D) (5 × 1000) × (2 × 4) = 40,000

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Definitions:

Security Characteristic Line

A graph that shows the relationship between the returns of a security versus the returns of the market, used in the analysis of a security's risk and return.

Benchmark Error

Use of an inappropriate proxy for the true market portfolio.

Capital Market Line

In the capital asset pricing model, a line that describes the risk-return trade-off for efficient portfolios, showing that higher risk leads to higher expected return.