Exhibit 8.6 Use the Information Below for the Following Problem(S)

question 25

Multiple Choice

Exhibit 8.6
Use the Information Below for the Following Problem(S)
Jonathan Crowley is a portfolio manager for a large pension fund. Last year his portfolio had an actual return of 12.6% with a standard deviation of 13% and a beta of 1.3. The market risk premium for this period of time was 6% and the risk-free rate of return was 5%.
-Refer to Exhibit 8.6.Based on the Capital Asset Pricing Model (CAPM) ,what is the required rate of return for this portfolio?

• A) 6.3%
• B) 7.8%
• C) 10.6%
• D) 12.8%
• E) 15.4%

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Definitions:

Stimulus

Any event or situation that evokes a response from an organism.

Discriminated Variable

A specific feature or cue in the environment that signals the availability of reinforcement or punishment, guiding behavior accordingly.

Consequence

The outcome or result of an action, often considered in terms of its effects or impacts.

Learning

The process of acquiring new understanding, knowledge, behaviors, skills, values, or preferences, often through study or experience.