If an Investor's Portfolio Is Allocated 75% to the Market

question 98

Multiple Choice

If an investor's portfolio is allocated 75% to the market portfolio and 25% to Treasury bills,then the investor should expect to receive:

• A) the risk-free rate plus 75% of the expected return on the market.
• B) the risk-free rate plus 75% of the expected market risk premium.
• C) 75% of the expected return on the market.
• D) 25% of the risk-free rate plus 75% of the expected market risk premium.

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Definitions:

Effective Revocation

The successful cancellation or withdrawal of a legal right, offer, or agreement, communicated in a manner recognized by law.

Option Contract

A contract that gives the holder the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Offeror's Estate

In contract law, refers to the handling of an offeror's outstanding offers after their death, focusing on whether these offers can still be accepted.

Silence

The absence of sound or the choice to refrain from speaking or making noise.