38 Your Present Portfolio Is
Security Sensitivity Proportion Expected Return $\begin{array} { l l l l } \text { A } & 2 & .4 & 16 \% \\ \text { B } & .7 & .4 & 10 \% \\ \text { C } & 1.2 & .2 & 12 \% \end{array}$

question 8

Multiple Choice

38. Your present portfolio is
Security Sensitivity Proportion Expected Return
$\begin{array} { l l l l } \text { A } & 2 & .4 & 16 \% \\ \text { B } & .7 & .4 & 10 \% \\ \text { C } & 1.2 & .2 & 12 \% \end{array}$
You propose raising the proportion of $\mathrm { C }$ from $.2$ to $.4$ , but the resulting arbitrage model recommends you should have the following proportion for

• A) .3
• B) .2
• C) .1
• D) 0

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is initially recorded at cost and subsequently adjusted for the investor's share of the investee's profits or losses.

Voting Stock

Shares of a company that grant the shareholder the right to vote on corporate matters and elect the board of directors.

Net Loss

Net loss occurs when a company's expenses exceed its revenues during a specific accounting period, resulting in a negative profit.

Dividend Revenue

Income received by investors from owning shares in a company, typically paid out from the company's profits.