The Variance of Returns for a Risky Asset Is 25

question 44

Multiple Choice

The variance of returns for a risky asset is 25 percent. The variance of the error term, Var(e) , is 8 percent. What portion of the total risk of the asset, as measured by variance, is systematic?

• A) 32 percent
• B) 8 percent
• C) 68 percent
• D) 25 percent
• E) 75 percent

---

Definitions:

Crystallized Intelligence

The ability to use skills, knowledge, and experience. It does not correlate with cognitive speed but increases with age.

Fluid Intelligence

The ability to think abstractly and solve problems in novel situations, independent of acquired knowledge.

Verbal Skills

The ability to express ideas effectively and communicate clearly using language, including both spoken and written forms.

Sexual Harassment

Unsolicited sexual propositions, appeals for sexual privileges, and additional forms of verbal or physical sexual harassment.