Four Wires Meet at a Junction

question 72

Multiple Choice

Four wires meet at a junction.The first carries 4 A into the junction, the second carries 5 A out of the junction, and the third carries 2 A out of the junction.The fourth carries:

• A)7 A out of the junction
• B)7 A into the junction
• C)3 A out of the junction
• D)3 A into the junction
• E)1 A into the junction

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Definitions:

Optimal Risky Portfolio

An investment portfolio that aims to achieve the highest possible return for a given level of risk.

Capital Market Line

A line used in the Capital Asset Pricing Model to illustrate the rates of return for efficient portfolios subject to the risk (measured by standard deviation) compared to the risk-free rate of return.

Efficient Frontier

Efficient Frontier is a concept in modern portfolio theory that refers to a set of investment portfolios that offer the highest expected return for a given level of risk.

Standard Deviation

A measure of the dispersion or variability of a set of data points or investment returns around the mean.