Which of the following equations is INCORRECT?

Question

Quizplus · Accepted Answer

The equation in option B is incorrect as it implies that the value of the portfolio is equal to the value of a single investment, which is not possible. A portfolio consists of multiple investments, each with its own value. The other equations are correct and commonly used in finance. Option A represents the expected return of a portfolio as the product of the expected return of a market factor (Z) and the expected return of individual investments (R). Option C represents the expected return of a portfolio as the sum of the product of weightings (Zi) and individual investment returns (Ri). Option D represents the expected return of a portfolio as the weighted average of individual investment returns, where the weights are the proportions of the portfolio invested in each investment.

Which of the Following Equations Is INCORRECT