Suppose the Risk-Free Return Is 6

question 65

Multiple Choice

Suppose the risk-free return is 6%. The beta of a managed portfolio is 1.5, the alpha is 3%, and the average return is 18%. Based on Jensen's measure of portfolio performance, you would calculate the return on the market portfolio as

• A) 12%.
• B) 14%.
• C) 15%.
• D) 16%.

Analyze the utility from income potential and how it influences decision-making regarding risk.

Understand and calculate the expected value in gambling or betting scenarios.

Compare and contrast risk aversion, risk neutrality, and risk-loving behaviors in financial decisions.

Understand the elements and enforceability of contracts.

---

Definitions:

Ethos

The characteristic spirit of a culture, era, or community as manifested in its beliefs and aspirations; in rhetoric, the ethical appeal or credibility of the speaker.

Aesthetic Principles

The standards that guide judgments about what is considered beautiful, pleasing, or artful.

Crescive Norms

Unwritten, societal rules that are discovered through interaction rather than being formally taught.

St. David's Day

A Welsh holiday celebrated on March 1st to honor Saint David, the patron saint of Wales, typically marked by wearing daffodils or leeks.