Both Assets B and C Plot on the SML

question 94

Multiple Choice

Both assets B and C plot on the SML.Asset B has a beta of 1.3 and an expected return of 13.1%.Asset C has a beta of .50 and an expected return of 7.50%.The risk-free rate is 4% and the expected return on the market portfolio is 11%.If you wish to hold a portfolio consisting of assets B and C,and have a portfolio beta equal to 1.0,what proportion of the portfolio must be in asset B?

• A)0.375
• B)0.50
• C)0.625
• D)0.75

---

Definitions:

Affective Commitment

The emotional attachment and involvement an employee feels towards their organization, influencing their willingness to stay and contribute positively.

Genetic Predisposition

The increased likelihood of developing a particular disease or condition based on an individual's genetic makeup.

Realistic Job Previews

A strategy used by employers to give prospective employees a true sense of what their roles and responsibilities will entail should they be hired.

Normative Commitment

An employee's psychological attachment to, and feeling of obligation towards, their organization.