What Happens to Expected Portfolio Return If the Portfolio Beta

question 28

Multiple Choice

What happens to expected portfolio return if the portfolio Beta increases from 1.0 to 1.5, the risk-free rate decreases from 5% to 4%, and the market risk premium increases from 8% to 9%?

• A)it increases from 12% to 14%.
• B)it increases from 13% to 17.5%.
• C)it increases from 14% to 21%.
• D)it remains unchanged.

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Definitions:

Calculus-Based Trust

Trust built on the expectation that others will act predictably based on past interactions.

Reward

A benefit, prize, or compensation given in recognition of one's effort, performance, or service.

Punishment

The imposition of a penalty as retribution for an offense, or as a means of influencing future behavior.

Relationship Negotiations

Negotiation processes that prioritize maintaining and strengthening the relationship between the parties involved.