Both Assets B and C Plot on the SML

question 84

Multiple Choice

Both assets B and C plot on the SML.Asset B has a beta of 1.3 and an expected return of 13.1%.Asset C has a beta of .50 and an expected return of 7.50%.The risk-free rate is 4%.If you wish to hold a portfolio consisting of assets B and C,and have a portfolio beta equal to 1.0,what is the expected return of the portfolio?

• A)4.0%
• B)7.5%
• C)11.0%
• D)13.1%

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Definitions:

Stimulus Generalisation

The tendency for the conditioned response to be evoked by stimuli that are similar to the conditioned stimulus used during learning.

Stimulus Discrimination

The ability to differentiate between two or more distinct stimuli, responding only to the specific stimulus conditioned.

Classroom Conditioning

The process of using behavioral psychology principles to encourage learning and desirable behavior within a classroom setting.

Reinforce Behaviour

The process of encouraging or establishing a pattern of behavior by offering rewards or consequences.