Consider a Well-Diversified Portfolio, A, in a Two-Factor Economy

question 39

Multiple Choice

Consider a well-diversified portfolio, A, in a two-factor economy. The risk-free rate is 6%, the risk premium on the first factor portfolio is 4%, and the risk premium on the second factor portfolio is 3%. If portfolio A has a beta of 1.2 on the first factor and .8 on the second factor, what is its expected return?

• A) 7.0%
• B) 8.0%
• C) 9.2%
• D) 13.0%
• E) 13.2%

Recognize the use of different types of memory (working, long-term) in everyday contexts.

Identify cognitive characteristics in infants that predict intelligence in later childhood.

Understand the principles of object permanence and how it is tested in infants.

Grasp the concepts of habituation and visual-recognition memory in infants.

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Definitions:

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity available to meet short-term obligations.

Long-Term Financing

Funding obtained for a time period exceeding one year, used for acquiring or investing in long-duration assets.

Conservative

In finance, conservative refers to an investment strategy or financial decision-making approach that prioritizes preservation of capital and minimizes risk.

Net Working Capital

The disparity between an organization's immediate assets and liabilities, showcasing its financial stability in the short-term.