Consider an Investor Who Holds a Risky Portfolio That Has

question 56

Multiple Choice

Consider an investor who holds a risky portfolio that has the same risk as the market portfolio. If the beta is one then the investor should expect to earn ________. Consider another investor who holds a riskless portfolio such as Treasury bills. If the beta is zero then the investor should earn ________.

• A) the riskless rate of return; the market portfolio rate of return.
• B) the risky return; the riskless rate of return.
• C) the market portfolio rate of return; the riskless rate of return.
• D) the market portfolio rate of return; the corporate bond rate of return.