Suppose a Sizeable,fully Diversified Portfolio Has an F₁ Beta of .9,an

question 7

Multiple Choice

Suppose a sizeable,fully diversified portfolio has an F₁ beta of .9,an F₂ beta of 1.4,and an expected return of 11.6 percent.If F₁ turns out to be 1.1 percent and F₂ is −.8 percent,what will be the actual rate of return based on a two-factor arbitrage pricing model?

• A)12.05 percent
• B)11.47 percent
• C)11.72 percent
• D)12.32 percent
• E)12.58 percent

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Definitions:

Genital Vasocongestion

The swelling of bodily tissues caused by increased vascular blood flow, often associated with sexual arousal.

Sexual Excitement

A state of heightened arousal and anticipation in anticipation of or during sexual activity.

Clitoris

A sensitive organ located at the top of the vulva, primarily involved in female sexual pleasure.

Psychological Experience

Pertains to the mental processes and emotions associated with an individual's perception of the world.