What Happens to Expected Portfolio Return If the Portfolio Beta

question 98

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 14.0%.
• B) It increases from 13 to 17.5%.
• C) It increases from 14 to 21.0%.
• D) It remains unchanged.

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Definitions:

Complex Cognition

The higher-order mental processes involved in learning, thinking, reasoning, and problem-solving.

Species

A group of living organisms consisting of similar individuals capable of exchanging genes or interbreeding.

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The behavior of non-human animals that involves using objects as functional extensions of body parts to accomplish tasks.

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A species of great ape known for their complex social behaviors and considered to be the closest living relatives to humans.