If the Plotting of a Portfolio's Returns Against Returns on the Market

question 40

Multiple Choice

If the plotting of a portfolio's returns against returns on the market index produces a tight pattern, then:

• A)the portfolio appears to be well diversified.
• B)the portfolio has a Beta of 1.0.
• C)the portfolio has very little systematic risk.
• D)the portfolio has a very low market risk premium.

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Definitions:

Circumstantial Evidence

Evidence that implies a fact or event without proving it directly, relying on inference to connect it to a conclusion of fact.

Permanent Liver Damage

Long-term harm to the liver that affects its function, potentially resulting from conditions like hepatitis, alcohol abuse, or drug toxicity.

Comparative Negligence

A legal doctrine that reduces the amount of damages a plaintiff can recover in a negligence-based claim, proportionate to their degree of fault in causing the harm.

Market Share

The portion of a market controlled by a particular company or product, often expressed as a percentage of total sales.