Estimating the Rate of Return for Any Portfolio Lying on the Security

question 45

Multiple Choice

Estimating the rate of return for any portfolio lying on the security market line requires which of the following?

• A)Market rate of return and the portfolio beta
• B)Market rate of return,market beta,and the risk-free rate
• C)Risk-free rate,factor beta,and the industry beta
• D)Factor beta and the market risk premium
• E)Portfolio beta,the risk-free rate,and the market risk premium

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Definitions:

Voluntary Action

An act done by choice or free will, without external compulsion.

Fiduciary Relationship

A trustworthy legal and ethical connection where the fiduciary is responsible for acting in the utmost interest of the principal or beneficiary.

Executor

An individual appointed to administer the estate of a deceased person in accordance with their will.

Holographic

Relates to a will or other document written entirely in the handwriting of the person whose signature it bears.