You Invest $1,000 in a Risky Asset with an Expected

question 20

Multiple Choice

You invest $1,000 in a risky asset with an expected rate of return of 0.17 and a standard deviation of 0.40 and a T-bill with a rate of return of 0.04. 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 0.11?

• A)53.8% and 46.2%
• B)75% and 25%
• C)62.5% and 37.5%
• D)46.2% and 53.8%

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Definitions:

Tariff

A tax imposed by a government on goods and services imported from other countries.

Quota Rights

Allowances or permissions given to countries or companies to import or export a certain amount of goods.

Federal Revenue

The income received by the federal government from taxes, fees, and other sources to fund its operations.

Auctioning Off

The process of selling an item to the highest bidder through a competitive bidding process, commonly used for selling goods, property, or services.