The Expected Return on the Market Is 12% with a Standard

question 32

Multiple Choice

The expected return on the market is 12% with a standard deviation of 15% and the risk-free rate is 5%.What is the required return on an efficient portfolio that has a standard deviation of 18%?

• A)10.83%
• B)12.67%
• C)13.40%
• D)14.40%

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Definitions:

Miles Traveled

A measure of distance covered, often used in the context of transportation, commuting, or travel.

Perfect Complements

Goods that are always used together in fixed proportions, where the increase in consumption of one good leads to an equal increase in the consumption of the other.

Income Effect

How an alteration in the income of an individual or the economy influences the demand level for a particular product or service.

Substitution Effect

The shift in consumption tendencies brought on by changes in the relative value of goods, compelling consumers to opt for an alternative product.