An Investor Was Expecting an 18% Return on His Portfolio

question 23

Multiple Choice

An investor was expecting an 18% return on his portfolio with beta of 1.25 before the market risk premium increased from 8 to 10%.Based on this change,what return will now be expected on the portfolio?

• A) 20.0%
• B) 20.5%
• C) 22.5%
• D) 26.0%

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Definitions:

Aversive Conditioning

A method of behavior modification that involves using unpleasant stimuli to discourage undesirable behaviors.

Transference

In psychoanalysis, the redirection of feelings and desires, especially those unconsciously retained from childhood, onto a new object or person, typically a therapist.

Cognitive Therapies

A category of psychotherapeutic treatment that helps patients understand the thoughts and feelings that influence behaviors.

Depressed Clients

Individuals seeking psychological help who are experiencing prolonged feelings of sadness, hopelessness, and a lack of interest or pleasure in activities.