What Is the Standard Deviation of the Market Portfolio If

question 20

Multiple Choice

What is the standard deviation of the market portfolio if the standard deviation of a well-diversified portfolio with a beta of 1.25 equals 20%?

• A) 16.00%
• B) 18.75%
• C) 25.00%
• D) 32.50%

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Definitions:

Marginal Cost

The cost of producing one additional unit of a product or service.

Fixed Costs

Costs that remain consistent regardless of the amount of goods produced or the level of business operations, including expenses like rent, salaries, and insurance fees.

Variable Costs

Expenses that change in proportion to the level of production or sales volume.

Fixed Costs

Fixed expenses, including rent, salaries, and insurance, that are unaffected by variations in production or sales levels.