UPS, a Delivery Services Company, Has a Beta of 1

question 46

Multiple Choice

UPS, a delivery services company, has a beta of 1.1, and Wal-Mart has a beta of 0.7. The risk-free rate of interest is 4% and the market risk premium is 7%. What is the expected return on a portfolio with 30% of its money in UPS and the balance in Wal-Mart?

• A) 9.74%
• B) 10.23%
• C) 9.25%
• D) 9.55%

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Definitions:

Airborne Precautions

Safety measures implemented to prevent the transmission of diseases that are spread through the air over long distances by small droplets or particles.

Tuberculosis

An infectious disease caused by the bacterium Mycobacterium tuberculosis, primarily affecting the lungs.

Rubella

A contagious viral infection best known for its distinctive red rash, also called German measles.

Influenza

A highly contagious viral infection of the respiratory passages causing fever, severe aching, and catarrh, and often occurring in epidemics.