You Invest $100 in a Risky Asset with an Expected

question 7

Multiple Choice

You invest $100 in a risky asset with an expected rate of return of 0.12 and a standard deviation of 0.15 and a T-bill with a rate of return of 0.05. What percentages of your money must be invested in the risk-free asset and the risky asset, respectively, to form a portfolio with a standard deviation of 0.06?

• A)30% and 70%
• B)50% and 50%
• C)60% and 40%
• D)40% and 60%

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Definitions:

Continual Reinforcement

A reinforcement schedule in which a behavior is reinforced every time it occurs, leading to rapid learning.

Flavor Aversions

The learned avoidance of a particular food or taste after a negative experience, associating it with illness or discomfort.

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Living beings that carry out essential life processes such as growth, reproduction, and metabolism.

Stimulus

An external or internal event or occurrence that elicits a response from a cognitive system or organism.