Use the Following Information to Answer the Question(s)below

question 81

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that all stocks can be grouped into two mutually exclusive portfolios (with each stock appearing in only one portfolio) : growth stocks and value stocks.Assume that these two portfolios are equal in size (market value) ,the correlation of their returns is equal to 0.6,and the portfolios have the following characteristics: The risk free rate is 3.5%.
-Which of the following equations is INCORRECT?

• A)E[R_xCML] = r_f + x(E[R_Mkt] + r_f)
• B)r_i = r_f + b(E[R_Mkt] - r_f)
• C)SD(R_xCML)= xSD(R_Mkt)
• D)E[R_xCML] = (1 - x)r_f + xE[R_Mkt]

Comprehend and apply the concept of pooling population proportions under specific conditions.

Interpret test statistics and p-values in hypothesis testing regarding population proportions.

Calculate the test statistic for comparing two population proportions.

Understand and identify Type I and Type II errors in hypothesis testing.

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Definitions:

Industry Produce

The total output of goods and services produced by all the firms operating in a particular industry.

Short-run Supply Curve

A graphical representation showing the quantity of a good that producers are willing to sell at different prices in the short run, where at least one input is fixed.

Cost Curves

Graphical representations that show the cost of production at different levels of output.

Identical

Identical means exactly the same, without any difference in form, nature, or substance, often used to describe objects, products, or entities.