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

question 49

Multiple Choice

The expected return on the market is 12 percent with a standard deviation of 16 percent and the risk-free rate is 4.5 percent.Which of the following portfolios are overpriced?

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

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Definitions:

Technological Advancement

The process of innovation and improvement in technology, leading to the development of new products or the enhancement of existing ones.

Higher Value Use

The employment of resources or assets in a manner that maximizes their value or return, often resulting in the most efficient and profitable outcome.

Operating Loss

A situation where a business's operating expenses exceed its revenues, indicating that it is not making a profit from its core operations.

Department Stores

Large retail establishments that offer a wide variety of goods and services across multiple departments, such as clothing, household goods, and appliances, under one roof.