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:

Investment Account

An account held at a financial institution and managed by an investment dealer that contains securities for investment purposes.

Goodwill

Goodwill represents the excess of the purchase price over the fair market value of the net identifiable assets acquired in a business combination. It is an intangible asset associated with the purchase of one company by another.

Partial Equity Method

An accounting method used by companies to record their investments in other companies when they can exert significant influence but do not have full control.

Goodwill

An intangible asset that arises when a business is purchased for more than the fair value of its tangible and identifiable intangible assets.