You Are Assigned the Task of Computing the Expected Return

question 97

Multiple Choice

You are assigned the task of computing the expected return on a portfolio containing several individual stocks.Which one of the following statements is correct concerning this task?

• A)The expected rate of return on the portfolio must be positive.
• B)The arithmetic average of the betas for each security held in the portfolio must equal 1.0.
• C)The portfolio beta must be 1.0.
• D)The summation of the return deviation from the portfolio expected return for each economic state must equal zero.
• E)The standard deviation of the portfolio must equal 1.0.

---

Definitions:

Fatigue

A subjective feeling of tiredness which is distinct from weakness, and has a gradual onset.

Anxiety

A feeling of worry, nervousness, or unease, often about an imminent event or something with an uncertain outcome.

Depression

A common and serious mood disorder that negatively affects how you feel, think, and handle daily activities, often characterized by persistent feelings of sadness and loss of interest.

Future Loss

The potential for an individual or entity to experience a decrease in value or benefit in the future.