A Diversified Portfolio Has a Beta of 1

question 51

Multiple Choice

A diversified portfolio has a beta of 1.33 and a raw return of 9.38%. The market return is 10.10% and the market risk premium is 6.58%. What is Jensen's alpha of the portfolio?

• A)−3.62%
• B)−2.89%
• C)−.29%
• D)2.89%
• E)3.62%

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Definitions:

SL

Sublingual, a method of administering medication under the tongue.

NPO

A medical abbreviation for "nil per os," Latin for "nothing by mouth," indicating a patient should not take food or water orally.

Effexor XR

A brand name for Venlafaxine, an antidepressant medication used in the treatment of major depressive disorder, anxiety, and panic disorder.

Keflex

A brand name for cephalexin, an antibiotic used to treat various bacterial infections.