An Expected Return from a Portfolio

question 39

Multiple Choice

An expected return from a portfolio

• A) can be calculated more accurately than the expected return from any of the securities in the portfolio.
• B) will lie somewhere between the highest and lowest expected returns from securities in the portfolio.
• C) cannot be computed if there are fewer than three securities in the portfolio.
• D) will exceed the highest expected return from any of the securities in the portfolio.
• E) will be lower than the expected return from the security in the portfolio with the lowest yield because portfolios have less risk than individual securities.

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Definitions:

Shortage/Surplus

Market scenarios where the demand for a product surpasses its available supply, leading to a shortage, or where the supply of the product is greater than its demand, resulting in a surplus.

Demand Equation

is a mathematical representation that shows the relationship between the quantity of a good demanded and its price along with other factors affecting demand.

Supply Equation

A mathematical formula used to describe the relationship between the price of a good or service and the quantity supplied, holding other factors constant.

Price Floor

A government- or authority-imposed minimum price that can legally be charged for a good or service.