UPS, a Delivery Services Company, Has a Beta of 1

question 46

Multiple Choice

UPS, a delivery services company, has a beta of 1.1, and Wal-Mart has a beta of 0.7. The risk-free rate of interest is 4% and the market risk premium is 7%. What is the expected return on a portfolio with 30% of its money in UPS and the balance in Wal-Mart?

• A) 9.74%
• B) 10.23%
• C) 9.25%
• D) 9.55%

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Definitions:

Atomic Sentences

Simplest types of statements that cannot be broken down into smaller parts while maintaining propositional meaning.

Atomic Sentences

Sentences that express a basic fact or idea without combining or including any logical operations or propositions.

Hypothetical Syllogism (HS)

A logical argument formed by two conditional statements and a conclusion that follows from chaining the conditionals together.

Modus Ponens (MP)

A logical argument form that asserts if "P implies Q" and "P is true," then "Q must also be true."