Table 8.3 Consider the Following Two Securities X and Y

question 8

Multiple Choice

Table 8.3
Consider the following two securities X and Y.
-Using the data from Table 8.3, what is the portfolio expected return and the portfolio beta if you invest 35 percent in X, 45 percent in Y, and 20 percent in the risk-free asset?

• A) 12.5%, 0.975
• B) 12.5%, 1.975
• C) 15.0%, 0.975
• D) 15.0%, 1.975

---

Definitions:

Federal Reserve Bank

The central banking system of the United States, established in 1913, which aims to provide the nation with a safer, more flexible, and stable monetary and financial system.

Economic Speculation

The practice of engaging in risky financial transactions in an attempt to profit from short or medium-term fluctuations in the market value of a tradable financial instrument.

Alan Greenspan

Former Chairman of the Federal Reserve of the United States, who served from 1987 to 2006 and played a key role in American monetary policy during that period.

Federal Reserve Bank

The Federal Reserve Bank is the central banking system of the United States, which oversees the nation's monetary policy and regulates its financial institutions.