You Invest $100 in a Risky Asset with an Expected

question 33

Multiple Choice

You invest $100 in a risky asset with an expected rate of return of 0.11 and a standard deviation of 0.20 and a T-bill with a rate of return of 0.03. What percentages of your money must be invested in the risky asset and the risk-free asset, respectively, to form a portfolio with an expected return of 0.08?

• A)85% and 15%
• B)75% and 25%
• C)62.5% and 37.5%
• D)57% and 43%

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Definitions:

Incremental Intelligence

The belief that intelligence can be developed through hard work, strategies, and learning from mistakes rather than being a fixed trait.

Componential Intelligence

Part of Sternberg's Triarchic Theory of Intelligence, focusing on the analytical aspects of intelligence, which involve problem-solving, logical reasoning, and the analysis of information.

Experiential Intelligence

The ability to adapt to new situations and learn from experience.

Componential

This term is related to breakdown into components, usually used in the context of analysis or theory that emphasizes the discrete elements that make up a whole.