What Is the Expected Return on a Portfolio Comprised of $6,200

question 6

Multiple Choice

What is the expected return on a portfolio comprised of $6,200 of stock M and $4,500 of stock N if the economy enjoys a boom period?

• A)10.93 percent
• B)11.16 percent
• C)12.55 percent
• D)12.78 percent
• E)13.69 percent

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Definitions:

Nominal Variables

Variables measured in monetary terms and not adjusted for inflation, representing prices or values at the time of transaction.

Monetary Neutrality

The economic theory that changes in the money supply only affect nominal variables and have no long-term effects on real variables like output.

Real Variables

Economic variables that are measured in physical units or have been adjusted for inflation, emphasizing their true value.

Quantity Theory

An economic theory which proposes that changes in the money supply will directly affect price levels in the economy over the long term.