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

question 21

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. The slope of the capital allocation line formed with the risky asset and the risk-free asset is equal to

• A)0.325.
• B)0.675.
• C)0.912.
• D)0.407.

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Definitions:

Visual Action Track

Also known as the dorsal stream, it is a pathway in the brain that is involved in the processing of movement and spatial location.

Dual Processing

The theory that the brain operates using two separate systems for processing information: one that is intuitive and automatic, and another that is deliberative and analytical.

Mental Activity

The operation of the mind in processing thoughts, remembering information, and solving problems.

Synchronized Activity

The coordination of events to operate a system in unison or the simultaneous occurrence of activities or processes.