If an Investor's Portfolio Is Allocated 75% to the Market

question 43

Multiple Choice

If an investor's portfolio is allocated 75% to the market portfolio and 25% to Treasury bills, then the investor should expect to receive:

• A)the risk-free rate plus 75% of the expected return on the market.
• B)the risk-free rate plus 75% of the expected market risk premium.
• C)75% of the expected return on the market.
• D)25% of the risk-free rate plus 75% of the expected return on the market.

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Definitions:

Demand For Capital

refers to the desire for investment in physical goods, technology, or equipment that can be used to produce other goods or services.

Derived Demand

The demand for a good or service that arises from the demand for another good or service, such as the demand for steel being derived from the demand for cars.

Productivity Of Labor

The measure of the output of goods and services produced by labor input, indicating the efficiency of labor use.

Demand For Labor

The need for employees by employers to carry out work, which varies with wage levels and economic conditions.