Use the Following Information to Answer the Question(s)below

question 81

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that all stocks can be grouped into two mutually exclusive portfolios (with each stock appearing in only one portfolio) : growth stocks and value stocks.Assume that these two portfolios are equal in size (market value) ,the correlation of their returns is equal to 0.6,and the portfolios have the following characteristics: The risk free rate is 3.5%.
-Which of the following equations is INCORRECT?

• A)E[R_xCML] = r_f + x(E[R_Mkt] + r_f)
• B)r_i = r_f + b(E[R_Mkt] - r_f)
• C)SD(R_xCML)= xSD(R_Mkt)
• D)E[R_xCML] = (1 - x)r_f + xE[R_Mkt]

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Definitions:

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The implementation of strategies and measures aimed at reducing the risk and severity of unintentional injuries or accidents.

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