An Investor Expects a Return of 18% on His Portfolio

question 86

Multiple Choice

An investor expects a return of 18% on his portfolio with a beta of 1.25.If the expected market risk premium increases from 8% to 10%,what return should he now expect on the portfolio?

• A) 20.0%
• B) 20.5%
• C) 22.5%
• D) 26.0%

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Definitions:

Existential Import

The implication that a statement makes about the existence of the subjects it mentions.

Modern Assumptions

Contemporary beliefs or presuppositions that influence one's perspective or argument, often taken for granted within a specific time period.

Traditional Assumptions

Established beliefs that are widely accepted without question or evidence.

Middle Term

In a syllogism, the term that appears in both premises but not in the conclusion, serving as a link between the other two terms.