A Diversified Portfolio Has a Beta of 1

question 21

Multiple Choice

A diversified portfolio has a beta of 1.47 and a raw return of 14.28 percent.The market return is 11.74 percent and the market risk premium is 7.85 percent.What is Jensen's alpha of the portfolio?

• A) −1.15 percent
• B) −0.86 percent
• C) −0.29 percent
• D) 0.48 percent
• E) 0.62 percent

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Definitions:

Conflicting Duties

Situations where an individual or organization faces two or more obligations that are difficult to fulfill simultaneously due to their opposing natures.

Ethical Dilemma

A situation where a person must choose between two morally correct actions that conflict.

Principle of Universality

A moral or ethical principle stating that rules or standards apply equally to everyone, regardless of circumstances or status.

General Plan

A broad, comprehensive strategy or course of action.