An Investor Expects a Return of 14

question 47

Multiple Choice

An investor expects a return of 14.7% on her portfolio with a beta of 1.13.If the expected market risk premium decreases from 8% to 7%,what return should she now expect on the portfolio?

• A) 13.57%
• B) 13.89%
• C) 14.67%
• D) 15.87%

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Definitions:

Endorphins

Natural chemicals in the brain that act as painkillers and mood enhancers, often released during exercise, excitement, pain, and sexual activity.

Rapidly

At a fast speed or in a short period of time.

Crack

A potent form of cocaine that is smoked to produce a rapid, intense high, often associated with severe addiction and negative health consequences.

Inhibitions

Psychological mechanisms that constrain or restrict behaviors, thoughts, or emotions deemed inappropriate or socially unacceptable.