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Suppose You Are Working with Two Factor Portfolios, Portfolio 1

question 63

Multiple Choice

Suppose you are working with two factor portfolios, portfolio 1 and portfolio 2. The portfolios have expected returns of 15% and 6%, respectively. Based on this information, what would be the expected return on well-diversified portfolio A, if A has a beta of 0.80 on the first factor and 0.50 on the second factor? The risk-free rate is 3%.


Definitions:

Lifetime Prevalence

The percentage of people within a population who have encountered a certain disorder at least once in their lifetime until the time they are evaluated.

Substance Abuse

The misuse of legal or illegal substances such as drugs or alcohol that leads to significant impairment or distress.

Eating Disorders

Mental disorders characterized by abnormal or disturbed eating habits that negatively affect a person's health and wellbeing.

Behavioural Disorder

A type of disorder that involves a pattern of disruptive behaviours in children and adults that last for at least six months and cause problems in school, work, or social relationships.

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