For an Investor Using Margin to Calculate the Expected Return

question 13

Multiple Choice

For an investor using margin to calculate the expected return, the proportion invested in the risky portfolio would be

• A) zero.
• B) may be less than or greater than 1.
• C) greater than 1.
• D) equal to the riskfree borrowing rate.

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Definitions:

Pattern of Responding

The typical manner in which an individual reacts to a stimulus or situation, often studied in psychology to understand behavior.

Studying

The act of dedicating time and attention to gaining knowledge on a subject, typically involving reading and research.

Negative Reinforcement

A motivation or feedback mechanism that strengthens a behavior because an unpleasant condition is removed or it avoids a negative situation.

Headache

A pain or discomfort in the head, scalp, or neck, often categorized by intensity and duration.