Portfolio C Has an Ex Post Alpha of +1

question 19

Multiple Choice

Portfolio C has an ex post alpha of +1.7 and the slope of the SML is 2.4. This means the reward-to-volatility ratio for Portfolio C will be

• A) between 1.7 and 2.4.
• B) also 1.7.
• C) less than 2.4.
• D) greater than 2.4.

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Definitions:

Scapegoat Theory

A theory suggesting that individuals may project their personal failures or problems onto a specific group or individual unfairly blamed for them.

Ingroup Bias

The tendency to favor and extend loyalty to members of one's own group over others, leading to prejudice and discrimination.

Prejudice

A preconceived opinion or bias, often negative, towards people, groups, or subjects without factual justification or knowledge.

Catharsis

A psychological concept that suggests expressing or experiencing strong emotions can lead to a state of psychological relief or liberation.