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

question 128

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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: 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%. -The Sharpe ratio for the market (which is a 50-50 combination of the value and growth portfolios) portfolio is closest to: A) .53 B) .58 C) .61 D) .79 The risk free rate is 3.5%.
-The Sharpe ratio for the market (which is a 50-50 combination of the value and growth portfolios) portfolio is closest to:

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Definitions:

Standard

A level of quality or attainment used as a measure, norm, or model in comparative evaluations.

Modeling

A learning process where individuals emulate or adopt behaviors, attitudes, or values observed in others.

Bobo Doll Study

An experiment conducted by Albert Bandura that demonstrated how children can learn aggressive behaviors through the observation of adult models.

Demonstrates

Involves showing or proving something through evidence or argument.

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