A Diversified Portfolio Has a Beta of 1

question 21

Multiple Choice

A diversified portfolio has a beta of 1.47 and a raw return of 14.28 percent.The market return is 11.74 percent and the market risk premium is 7.85 percent.What is Jensen's alpha of the portfolio?

• A) −1.15 percent
• B) −0.86 percent
• C) −0.29 percent
• D) 0.48 percent
• E) 0.62 percent

---

Definitions:

Observational Learning

The process of learning behaviors by watching and imitating others, also known as modeling.

Operant Conditioning

The technique by which learning adjusts the vigor of an action through the employment of reinforcement or discouragement.

Classical Conditioning

Education that takes place by associating an environmental cue with a naturally existing stimulus.

Positive Reinforcers

Stimuli that, when presented after a behavior, increase the likelihood of that behavior being repeated.