The Expected Return on MSFT Next Year Is 12% with a Standard

question 83

Multiple Choice

The expected return on MSFT next year is 12% with a standard deviation of 20%. The expected return on AAPL next year is 24% with a standard deviation of 30%. If James makes equal investments in MSFT and AAPL, what is the expected return on his portfolio?

• A) 20%
• B) 16%
• C) 18%%
• D) 25%

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Definitions:

Resource Prices

The costs associated with acquiring the inputs needed for production, including raw materials, labor, and capital.

Industry Expands

The process of growth within a particular sector due to factors like increased demand, technological advancements, or entry of new businesses.

Competitive Price-taker Market

A market structure where sellers accept the market price as given, having no control over it due to perfect competition.

Long-run Equilibrium

A state in which all factors of production and costs are variable, allowing firms to enter or exit the market, ultimately resulting in no economic profit for the firms in a perfectly competitive market.