Question
Consider a portfolio comprised of four risky securities. Assume the economy has three states with varying probabilities of occurrence. Which one of the following will
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Consider a portfolio comprised of four risky securities. Assume the economy has three states with varying probabilities of occurrence. Which one of the following will guarantee that the portfolio variance will equal zero?
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The portfolio beta must be zero.
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The portfolio expected rate of return must equal expected market rate of return.
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The portfolio risk premium must equal zero.
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The portfolio expected rate of return must be the same for each economic state.
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There must be equal probabilities that state of the economy will be boom or bust
Consider a portfolio comprised of four risky securities. Assume the economy has three states with varying probabilities of occurrence. Which one of the following will guarantee that the portfolio variance will equal zero?
-
The portfolio beta must be zero.
-
The portfolio expected rate of return must equal expected market rate of return.
-
The portfolio risk premium must equal zero.
-
The portfolio expected rate of return must be the same for each economic state.
-
There must be equal probabilities that state of the economy will be boom or bust
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Intermediate Accounting
Authors: J. David Spiceland, James Sepe, Mark Nelson
6th edition
978-0077328894, 71313974, 9780077395810, 77328892, 9780071313971, 77395816, 978-0077400163
