If the Plot of a Portfolio's Returns Against Returns on the Market

question 48

Multiple Choice

If the plot of a portfolio's returns against returns on the market index produces a tight pattern,then the portfolio:

• A) appears to be well diversified.
• B) has a beta of 0.
• C) has very little systematic risk.
• D) has a risk premium lower than the market.

---

Definitions:

Demand

The quantity of a good or service that consumers are willing and able to purchase at a given price over a specific period of time.

Demand

The total quantity of goods or services that consumers are willing and able to purchase at various prices during a specific time period.

Elastic

Describes a situation where the demand for a good or service significantly changes in response to changes in price.

Elasticities

Measures of how much the quantity demanded or supplied of a good responds to changes in price, income, or other factors.