What Happens to Expected Portfolio Return If the Portfolio Beta

question 50

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 R_p = 5% + 1(8)
• = 13%
• R_p = 4% +1.5(9)
• = 17.5%

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Definitions:

Management Paradigm

A set of principles and practices that guide how an organization is managed, influencing approaches to leadership, decision-making, and organizational culture.

Scientific Management

An approach to management that analyzes and synthesizes workflows, aiming to improve economic efficiency, especially labor productivity, through scientific methods.

Mass Manufacturing

The production of large quantities of standardized products, often utilizing assembly lines and automation to achieve efficiency and economies of scale.

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Employees who work schedules outside the traditional 9-5 working hours, often including evenings, nights, or rotating shifts.