Consider a Risky Portfolio, A, with an Expected Rate of Return

question 35

Multiple Choice

Consider a risky portfolio, A, with an expected rate of return of 0.15 and a standard deviation of 0.15, that lies on a given indifference curve.Which one of the following portfolios might lie on the same indifference curve?

• A)E(r) = 0.15; Standard deviation = 0.20
• B)E(r) = 0.15; Standard deviation = 0.10
• C)E(r) = 0.10; Standard deviation = 0.10
• D)E(r) = 0.20; Standard deviation = 0.15

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Definitions:

Balance Sheet

A summary that encapsulates a business's liabilities, assets, and shareholders' equity at a distinct date.

Worksheet

A paper or electronic document with rows and columns, used for organizing, calculating, and presenting financial information.

Depreciation Expense

An accounting method of allocating the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.

Prepaid Insurance

An asset account that represents insurance premiums paid in advance, which have not yet expired at the time of the balance sheet.