The Expected Return of a Portfolio of Risky Securities

question 63

Multiple Choice

The expected return of a portfolio of risky securities

• A)is a weighted average of the securities' returns.
• B)is the sum of the securities' returns.
• C)is the weighted sum of the securities' variances and covariances.
• D)A and C.
• E)none of the above.

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Definitions:

Variable Costs

Expenses that vary directly with the amount of activity or output in a company.

Financial Advantage

The benefit obtained by a business from its financial decisions and strategies.

Fixed Manufacturing Overhead

Costs related to manufacturing that do not change with the level of production, such as salaries of supervisors and rent for factory space.

Contribution Margin

The difference between sales revenue and variable costs of production, indicating how much revenue contributes towards covering fixed costs and generating profit.