Stock J Has a Beta of 1

question 29

Multiple Choice

Stock J has a beta of 1.17 and an expected return of 14.4 per cent,while Stock K has a beta of 0.68 and an expected return of 7.6 per cent.You want a portfolio with the same risk as the market.What is the expected return of your portfolio?

• A)12.04 per cent
• B)13.13 per cent
• C)10.67 per cent
• D)11.62 per cent
• E)11.18 per cent

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Definitions:

Long-Term Forecasts

Predictions about future events, trends, or behaviors that extend over a significant period of time, usually beyond a year.

Supply And Demand

Economic model describing the interaction between the availability of a product (supply) and the desire for that product (demand).

Static Time-Series Method

A forecasting technique that assumes past data patterns will continue into the future without adjusting for dynamic changes.

Historical Data

Past information and data used to analyze trends, forecast future events, and make informed decisions.