Consider the Following Portfolio of Assets What Is the Expected Return on the Portfolio (Round to |

question 14

Multiple Choice

Consider the following portfolio of assets: $$\begin{array} { | c | c | c | c | c | c | } \hline \text { Loan } i & \text { Weight } i & \text { Expected return } i & \sigma i & \sigma i ^ { 2 } & \\\hline 1 & 0.30 & 13 \% & 9.06 \% & 82.0 \% & \mathrm { P } _ { 12 } = - 0.87 \\\hline 2 & 0.70 & 11 \% & 8.72 \% & 76.0 \% & \sigma _ { 12 } = - 75.0 \% \\\hline\end{array}$$ What is the expected return on the portfolio (round to two decimals) ?

• A)0.3(13%) + 0.7(11%) = 11.60%
• B)(13% + 11%) / 2 = 12.00%
• C)(0.3)²(13%) + (0.7)²(11%) = 6.56%
• D)[(0.3)²(13%) + (0.7)²(11%)] * 2 = 13.12%

Understand the role of the "invisible hand" in competitive markets and its impact on efficiency and innovation.

Understand the concepts of equilibrium, total revenues, and opportunity costs in purely competitive markets.

Identify the characteristics of a purely competitive market at long-run equilibrium.

Differentiate between productive and allocative efficiency in the context of a purely competitive market.

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Definitions:

Column Variable

A variable represented by a column in a data table, where each row entry under that column pertains to different observations or records.

Degrees of Freedom

Degrees of freedom refer to the number of values in a calculation which are free to vary without violating the constraints of the calculation.

Chi-Square

A statistical test used to determine if there is a significant difference between observed frequencies and expected frequencies in categorical datasets.

Row Variable

A row variable in statistical or data analysis refers to a variable that is presented horizontally in a table or dataset, representing different categories or groups for analysis.