Use the Information for the Question(s)below

question 8

Multiple Choice

Use the information for the question(s) below.
Suppose that you currently have $250,000 invested in a portfolio with an expected return of 12% and a volatility of 10%.The efficient (tangent) portfolio has an expected return of 17% and a volatility of 12%.The risk-free rate of interest is 5%.
-Which of the following statements is FALSE?

• A)Because all other risk is diversifiable,it is an investment's beta with respect to the efficient portfolio that measures its sensitivity to systematic risk,and therefore determines its cost of capital.
• B)If a security's expected return exceeds its required return given our current portfolio,then we can improve the performance of our portfolio by adding more of the security.
• C)The appropriate risk premium for an investment can be determined from its beta with the efficient portfolio.
• D)As we buy shares of a security i,its correlation with our portfolio P will increase,ultimately raising its required return until E[R_i] = R_p.

Understand the basic principles of supply and demand and how they relate to market equilibrium.

Differentiate between elastic and inelastic demand and supply and their impacts on tax burden distribution.

Recognize the differing economic philosophies of Keynes and Hayek regarding government intervention and central planning.

Comprehend the effects of price controls, including ceilings and floors, on market activities.

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Definitions:

Limbic Structure

A rephrased term for the Limbic System, focusing on the physical architectures that comprise this complex system involved in emotions and memory.

Aggression

Behavior aimed at causing harm or pain to others, often motivated by anger or frustration.

Sensory Control Center

A term that refers to the parts of the brain responsible for processing sensory information from the environment.

Oldest Regions

refers to the most ancient parts of the brain, such as the brainstem and cerebellum, which govern fundamental life functions like breathing, heart rate, and motor coordination.