Suppose You Invest Equal Amounts in a Portfolio with an Expected

question 25

Multiple Choice

Suppose you invest equal amounts in a portfolio with an expected return of 16 percent and a standard deviation of returns of 18 percent and a risk-free asset with an interest rate of 4 percent.
Calculate the standard deviation of the returns on the resulting portfolio.

• A)8 percent
• B)10 percent
• C)20 percent
• D)9 percent

---

Definitions:

Confidence Coefficient

The confidence level expressed as a decimal value. For example, .95 is the confidence coefficient for a 95% confidence level.

Average Yearly Salaries

The mean amount of money earned by employees in a specific job or industry over the course of a year.

Top Managers

The highest level of management in an organization, responsible for setting strategic goals and making overarching decisions.

Private Organizations

Non-governmental organizations typically driven by individual or group interests, often focused on business, education, or social issues.