Given an Optimal Risky Portfolio with Expected Return of 12

question 41

Multiple Choice

Given an optimal risky portfolio with expected return of 12%, standard deviation of 26%, and a risk free rate of 5%, what is the slope of the best feasible CAL?

• A)0.64
• B)0.27
• C)0.08
• D)0.33

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Definitions:

Liquidation

The process of bringing a business to an end and distributing its assets to claimants, often preceded by insolvency.

Noncash Assets

Assets that cannot be easily converted to cash but hold value, such as real estate, equipment, and intellectual property.

Deficit

The amount by which expenses exceed income or costs exceed revenues.