A Portfolio Has an Actual Return of 15

question 60

Multiple Choice

A portfolio has an actual return of 15.17%, a beta of .90, and a standard deviation of 7.2%. The market return is 13.4% and the risk-free rate is 2.8%. What is the portfolio's Jensen's alpha?

• A)2.25%
• B)2.51%
• C)2.67%
• D)2.83%
• E)3.04%

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Definitions:

Perfect Price Discrimination

A pricing strategy where a seller charges the maximum possible price for each unit consumed, extracting the maximum consumer surplus.

Profit

The profit achieved when the revenue generated by a business operation is greater than the expenses, costs, and taxes required to maintain that operation.

Profit-Maximizes

Refers to the strategy or the condition where a firm adjusts its production and pricing to achieve the highest possible profit.

Profit

The financial gain realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.