If the Plotting of a Portfolio's Returns Against Returns on the Market

question 29

Multiple Choice

If the plotting of a portfolio's returns against returns on the market index produces a tight pattern,then:

• A) the portfolio appears to be well diversified.
• B) the portfolio has a beta of 0.
• C) the portfolio has very little systematic risk.
• D) the portfolio has a very low market risk premium.

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Definitions:

Slow-Wave

Referring to the low-frequency, high-amplitude brainwaves that are dominant during the deepest stages of sleep, playing a critical role in restorative sleep processes.

REM

Rapid Eye Movement, a sleep phase characterized by fast movements of the eyes, low muscle tone, vivid dreams, and increased brain activity.

Paradox

A statement or proposition that, despite sound reasoning, leads to a conclusion that seems logically unacceptable or self-contradictory.

REM Sleep

Rapid Eye Movement sleep, a phase of sleep where dreaming occurs, characterized by rapid movement of the eyes and increased brain activity.