Assume You Own a Portfolio of Diverse Securities Which Are

question 59

Multiple Choice

Assume you own a portfolio of diverse securities which are each correctly priced.Given this, the reward-to-risk ratio:

• A)for the portfolio must equal 1.0.
• B)for the portfolio must be less than the market risk premium.
• C)for each security must equal zero.
• D)of each security is equal to the risk-free rate.
• E)of each security must equal the slope of the security market line.

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Definitions:

Monthly Payments

Regular payments made once a month, typically used in contexts such as loans, mortgages, and subscription services.

Compounded Annually

The calculation of interest on both the initial principal and the accumulated interest from previous periods on a yearly basis.

Yearly Contributions

The total amount of money added to a fund or investment over the course of a year.

Rate of Interest

The percentage of a sum of money charged for its use, often expressed annually.