Exhibit 7-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 52

Multiple Choice

Exhibit 7-5
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{ccc}\text { Portiolio } & \text { Expected Return } & \text { Standard Deviation } \\\hline \text { A } & 9.8 \% & 14.0 \% \\\text { B } & 6.7 \% & 9.8 \% \\\text { C } & 11.2\%& 18.5\%\end{array}$
-Refer to Exhibit 7-5. Calculate the risk premium per unit of risk for the three portfolios above assuming the risk-free rate is 4.0%. $$\begin{array} { c c c c } \text { Partiolin: } & \mathbf { A } & \mathbf { B } & \mathbf { C } \\\hline \text { I. } & 0.068 & 0.027 & 0.072 \\\text { II. } & 0.414 & 0.276 & 0.389 \\\text { III. } & 0.700 & 0.680 & 0.605 \\\text { IV } & 0.300 & 0.280 & 0.205 \\\text { V. } & 0.650 & 0.580 & 0.480\end{array}$$

• A) I
• B) II
• C) III
• D) IV
• E) V

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Definitions:

Price-cost Margins

The difference between the selling price of a product and its production cost, indicating the profit margin per unit sold.

Beverage Merger

A process where two or more companies producing drinks agree to operate as a single business entity, usually to enhance market share, efficiency, or competitiveness.

DS Services of America

A beverage company that specializes in water delivery and coffee service to homes, offices, and retail establishments in the United States.

Coffee Delivery Systems

Methods or services designed to deliver coffee or coffee products directly to consumers or businesses.