Use the Following Information to Answer the Question(s)below

question 81

Multiple Choice

Use the following information to answer the question(s) below.
Suppose that all stocks can be grouped into two mutually exclusive portfolios (with each stock appearing in only one portfolio) : growth stocks and value stocks.Assume that these two portfolios are equal in size (market value) ,the correlation of their returns is equal to 0.6,and the portfolios have the following characteristics: The risk free rate is 3.5%.
-Which of the following equations is INCORRECT?

• A)E[R_xCML] = r_f + x(E[R_Mkt] + r_f)
• B)r_i = r_f + b(E[R_Mkt] - r_f)
• C)SD(R_xCML)= xSD(R_Mkt)
• D)E[R_xCML] = (1 - x)r_f + xE[R_Mkt]

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Definitions:

Developed Countries

Nations with advanced industrial bases, higher standards of living, and higher Human Development Index scores relative to other countries.

Death

The cessation of all biological functions that sustain a living organism, marking the end of life.

Antagonistic Pleiotropy

A genetic phenomenon where one gene influences multiple traits in a way that is beneficial to one trait but detrimental to another.

S Allele

A specific version of a gene, often referring to those determining self-incompatibility in plants, which helps prevent self-fertilization and promotes genetic diversity.