USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the Three

question 15

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
Consider the three stocks, stock X, stock Y, and stock Z, that have the following factor loadings (or factor betas) .
The zero-beta return ( $\lambda$ 0) = 3 percent, and the risk premia are $\lambda$ 1 = 10 percent and $\lambda$ 2 = 8 percent. Assume that all three stocks are currently priced at $50.
-Refer to Exhibit 7.9. Assume that you wish to create a portfolio with no net wealth invested. The portfolio that achieves this has 50 percent in stock X, -100 percent in stock Y, and 50 percent in stock Z. The weighted exposure to risk factor 2 for stocks X, Y, and Z are

• A) 0.50, -1.0, 0.50.
• B) -0.50, 1.0, -0.50.
• C) 0.60, -0.85, 0.25.
• D) F-0.275, 0.10, 0.175.
• E) 0.40, -0.75, 0.25.

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Definitions:

Shaded-pole Induction Motor

A type of single-phase induction motor which operates by creating a rotating magnetic field using a shading coil.

Secondary Winding

Part of a transformer that receives energy from the primary winding and transmits it to the load.

Shorted

A condition in which an electrical circuit bypasses its intended path due to a direct path of low resistance.

Rotating Magnetic Field

The revolving magnetic field inside a polyphase motor.