If a Well-Diversified Portfolio of Stocks Has an Expected Return

question 38

Multiple Choice

If a well-diversified portfolio of stocks has an expected return of 25% when the expected return on the market portfolio is 15%,then

• A) Treasury bills are offering a 10% yield.
• B) The portfolio beta is greater than 1.0.
• C) The portfolio beta equals 1.67.
• D) The investor's portfolio contains many defensive stocks.

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Definitions:

Competitive Firms

Businesses that operate in markets where there are many buyers and sellers, and no single entity can control the price.

Sherman Act

A foundational antitrust law in the United States aimed at prohibiting monopolies and fostering competition among businesses.

Interstate Commerce Act

A regulatory law enacted in the United States in 1887 to address unfair practices in the railroad industry and to regulate interstate commerce.

Federal Trade Commission Act

The federal law of 1914 that established the Federal Trade Commission.