Using the S&P 500 Portfolio as a Proxy of the Market

question 8

Multiple Choice

Using the S&P 500 portfolio as a proxy of the market portfolio

• A) is appropriate because U.S. securities represent more than 60% of world equities.
• B) is appropriate because most U.S. investors are primarily interested in U.S. securities.
• C) is appropriate because most U.S. and non-U.S. investors are primarily interested in U.S. securities.
• D) is inappropriate because U.S. securities make up less than 41% of world equities.
• E) is inappropriate because the average U.S. investor has less than 20% of his or her portfolio in non-U.S. equities.

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Definitions:

Unconditioned Stimulus

A stimulus that instinctively elicits a response without any prerequisite learning.

Conditioned Stimulus

A once-neutral trigger that, upon association with an unconditioned stimulus, in time provokes a conditioned response.

Extinction

In psychology, the gradual weakening and disappearance of a conditioned response when the conditioned stimulus is no longer paired with the unconditioned stimulus.

Discrimination

The unjust or prejudicial treatment of different categories of people, especially on the grounds of race, age, sex, or disability.