You Invest $100 in a Risky Asset with an Expected

question 28

Multiple Choice

You invest $100 in a risky asset with an expected rate of return of 0.11 and a standard deviation of 0.21 and a T-bill with a rate of return of 0.045. 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 0.08?

• A)30.1% and 69.9%
• B)50.5% and 49.50%
• C)60.0% and 40.0%
• D)61.9% and 38.1%

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Definitions:

Class Size

The number of students in a classroom setting, which can influence the learning environment and educational outcomes.

Stem-And-Leaf

A graphical representation that organizes data points by splitting each value into a "stem" (the leading digit or digits) and a "leaf" (the final digit).

Skewed

A description of a distribution that is not symmetrical, with a longer tail on one side of the peak than on the other, often indicating the presence of outliers.

Profits

The financial benefit that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining that activity.