Use the Information for the Question(s) Below

question 108

Multiple Choice

Use the information for the question(s) below.
You are presently invested in the Luther Fund, a broad-based mutual fund that invests in stocks and other securities. The Luther Fund has an expected return of 14% and a volatility of 20%. Risk-free Treasury Bills are currently offering returns of 4%. You are considering adding a precious metals fund to your current portfolio. The metals fund has an expected return of 10%, a volatility of 30%, and a correlation of -.20 with the Luther Fund.
-The beta of the precious metals fund with the Luther Fund is closest to:

• A) -0.3
• B) -0.6
• C) 0.3
• D) 0.6

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Definitions:

Quantity Supplied

The amount of a good or service that producers are willing and able to sell at a given price.

Government

A system or group of people governing an organized community, often a state.

Maximum Price

A price ceiling set by a governing body meant to control the maximum price that can be charged for a product or service, often implemented to prevent prices from reaching levels considered too high for consumers to afford.

Equilibrium Price

The price at which the quantity of a good supplied is equal to the quantity of the good demanded.