The Expected Return on the Market Is 12 Percent with a Standard

question 94

Multiple Choice

The expected return on the market is 12 percent with a standard deviation of 20 percent and the risk-free rate is 4 percent.Which of the following portfolios are correctly priced?

• A) 1 and 2 only
• B) 1 and 4 only
• C) 2 and 3 only
• D) 3 and 4 only

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Definitions:

Clean-smelling Citrus Scent

A fresh and invigorating aroma associated with citrus fruits, often used to enhance mood and environmental cleanliness.

ICU

Intensive Care Unit, a specialized department in a hospital that provides intensive care medicine.

Priming

A psychological concept where exposure to one stimulus influences the response to a subsequent stimulus, without conscious guidance or intention.

Cleansed Hands

A metaphorical term denoting a state of having no involvement or being free of guilt in a situation or wrongdoing.