Use the Following Information to Answer the Question(s)below

question 80

Multiple Choice

Use the following information to answer the question(s) below.
Your investment portfolio consists of $10,000 worth of Google stock.Suppose that the risk-free rate is 4%,Google stock has an expected return of 14% and a volatility of 35%,and the market portfolio has an expected return of 12% and a volatility of 18%.Assume that the CAPM assumptions hold.
-What alternative investment has the highest possible expected return while having the same volatility as Google?

• A)-25% in the risk-free asset and +125% in the market portfolio
• B)-20% in the risk-free asset and +120% in the market portfolio
• C)-94% in the risk-free asset and +194% in the market portfolio
• D)6% in the risk-free asset and +94% in the market portfolio

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Definitions:

Capitalized Cost

The total of all costs incurred to acquire an asset and prepare it for its intended use, often including the purchase price and costs of installation.

Freight

The transport of goods and cargo by land, air, or sea, often involving the payment of a fee for such service.

Pavement Assessment

The process of evaluating the condition and performance of road surfaces to determine repair and maintenance needs.

Construction Period Interest

This is the interest accrued on funds borrowed to finance the construction of a property and is typically capitalized into the cost of the asset until it is ready for its intended use.