Stock J Has a Beta of 1

question 29

Multiple Choice

Stock J has a beta of 1.17 and an expected return of 14.4 percent,while Stock K has a beta of 0.68 and an expected return of 7.6 percent.You want a portfolio with the same risk as the market.What is the expected return of your portfolio?

• A)10.67 percent
• B)11.18 percent
• C)11.62 percent
• D)12.04 percent
• E)13.13 percent

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Definitions:

Harvest Gypsies

A term historically used to describe itinerant agricultural workers, particularly those who moved from farm to farm during the harvest seasons.

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Individuals who travel from one location to another, often seasonally, to work in agriculture, usually under temporary contracts and often facing challenging conditions.

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A severe worldwide economic downturn that took place mostly during the 1930s.

Upton Sinclair

An American writer and social activist best known for his novel "The Jungle," which exposed the harsh conditions and exploited lives of immigrants in the United States' meatpacking industry, leading to public outrage and regulatory reforms.